While there are numerous Japanese stocks with reasonably high dividend yields, here we have picked out four companies which are less likely to reduce their dividends in the event of an economic downturn.
With dividend yields of mainly over 4%, the following Japanese companies have good histories of maintaining and/ or increasing their dividend payments.
|Company Name||Dividend Yield||Dividend per Share (JPY)|
|1. Nippon Telegraph & Telephone Corp. (NTT)||4.2176%||95|
|2. Sumitomo Mitsui Financial Group, Inc.||6.0452%||190|
|3. Sompo Japan Nipponkoa Holdings||4.0973%||150|
|4. Kyowa Exeo Corporation||3.0495%||80|
1. Nippon Telegraph & Telephone Corp. (NTT)
Dividend Yield: 4.2176%
Dividend per Share (JPY): 95
Nippon Telegraph & Telephone Corp. is a large telecommunications holding company. It was established in 1952 and notable subsidiaries include NTT Docomo and NTT Data.
While the domestic market of landline telecoms is on the decline, NTT has been ramping up its international business and making use of its sizeable assets and resources at home.
According to its IR Presentation in August 2020, their “basic policy is steady dividend increases” and their dividend per share has increased eight-fold since 2004.
2. Sumitomo Mitsui Financial Group, Inc.
Dividend Yield: 6.0452%
Dividend per Share (JPY): 190
Many people in Japan refer to the three mega banks in terms of their color. While Mitsubishi UFJ is red and Mizuho is blue, Sumitomo Mitsui is referred to as “green”.
Sumitomo Mitsui Financial Group, Inc. is a holding company for Sumitomo Mitsui Banking Corporation and its subsidiaries. The Company operates through four segments: Commercial Banking, Leasing, Securities and Consumer Finance.
With the backdrop of low interest rates and other woes impacting finance businesses, it might be difficult to be optimistic about the company in the medium term. However, the company has announced structural changes aimed at sustainable development in order to rise to its challenges.
It is difficult to see this large company growing its operations significantly, and its dividends could be hit in event of many of its customers going bankrupt. However, if as long as this does not happen, it has announced that it will maintain or even increase its dividend in the coming years.
In November 2019, the company issued a policy of “progressive dividend policy (maintaining or increasing dividends), aiming for a dividend payout ratio of 40% during the next medium-term plan“. The payout ratio is currently relatively low at 34.6% (fiscal year ending March 31, 2019), so we may well expect future increases.
3. Sompo Japan Nipponkoa Holdings
Dividend Yield: 4.0973%
Dividend per Share (JPY): 150
Founded in 2001, Sompo Holdings is one of the top three insurance companies in Japan along with Tokio Marine Holdings and MS&AD.
While the domestic market is expected to show a contracting trend in the medium term, such as a decrease in automobile insurance transaction volume, while the overseas business is being actively promoted, the current profit level can be maintained.
In particular, in the year ended March 31, 2020, profits were hit by an exceptionally bad period of natural disasters in 2019. In normal times, the company believes that it is easy to secure profit increase in the year ending March 2021. It is therefore reasonable to expect that the company’s “basic policy of continuing to increase dividends” will be observed.
4. KYOWA EXEO CORPORATION
Dividend Yield: 3.0495%
Dividend per Share (JPY) 80
Established in 1951, Kyowa Exeo is a major information and communications construction and engineering company. It operates through the following segments: Kyowa Exeo Group, C-Cube Group, Seibu Electric Industry Group, and Nippon Dentsu Group. These group company segments offer engineering, network, and systems integration solutions.
Going forward, we can expect solid expansion thanks to the increased 5G-related capital investment by telecommunications companies.
In addition, based on a strong balance sheet, the company has announced DOE (Dividend on Shareholders’ Equity) of 3.5% as a guideline for dividends, and since strong demand is anticipated, a stable dividend can be expected.