Japan’s stock markets have been on the rise, with the Nikkei 225 Index gaining 3.1% and the broader TOPIX Index up 2.8%, driven by a weakened yen following the U.S. Federal Reserve's recent rate cut. Meanwhile, the Bank of Japan's decision to keep rates steady has further influenced market dynamics. In this environment, dividend stocks can be particularly appealing as they offer a steady income stream while potentially benefiting from favorable economic conditions and currency movements.
Overview: Nippon Shinyaku Co., Ltd. manufactures and sells pharmaceuticals and foodstuffs in Japan and internationally, with a market cap of ¥260.39 billion.
Operations: Nippon Shinyaku Co., Ltd. generates revenue from two primary segments: pharmaceuticals and foodstuffs.
Dividend Yield: 3.2%
Nippon Shinyaku has shown stable dividend payments over the past decade, with a reasonably low payout ratio of 30.5%, indicating dividends are well covered by earnings. However, its high cash payout ratio of 99.5% suggests dividends are not well covered by free cash flows. The company's current dividend yield is 3.21%, lower than the top quartile in Japan's market but still reliable and growing steadily for ten years despite recent earnings growth concerns and upcoming Q1 results on Aug 07, 2024.
Overview: Tsumura & Co. manufactures and sells pharmaceutical products from crude drugs derived from plants and other natural products in Japan and internationally, with a market cap of ¥329.61 billion.
Operations: Tsumura & Co. generates ¥157.50 billion in revenue from its pharmaceutical products derived from natural sources.
Dividend Yield: 3.1%
Tsumura is trading at 39.3% below its estimated fair value, presenting a good relative value compared to peers. The company's dividend payments have been stable and growing over the past decade with a low payout ratio of 27.4%, indicating dividends are well covered by earnings but not by free cash flows. Despite its current yield of 3.13% being lower than the top quartile in Japan's market, analysts expect a price rise of 21.6%.
Overview: Tsugami Corporation, along with its subsidiaries, manufactures and sells precision machine tools in Japan and has a market cap of ¥70.42 billion.
Operations: Tsugami Corporation generates revenue from various regions, including ¥71.11 billion from China, ¥5.33 billion from India, ¥29.24 billion from Japan, and ¥1.94 billion from Korea.
Dividend Yield: 3.2%
Tsugami's dividend payments have been reliable and stable over the past decade, supported by a low payout ratio of 33.7%, ensuring sustainability from earnings and cash flows. Despite a yield of 3.25%, which is lower than Japan's top quartile, the stock is trading at 73.5% below its estimated fair value, suggesting good relative value. Recent activities include completing a share buyback worth ¥215.2 million and disposing treasury stock as restricted compensation in June 2024.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include TSE:4516 TSE:4540 and TSE:6101.
