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Japan Inc. returning more profit to shareholders

TOKYO -- Armed with strong earnings, Japanese companies are sharing more profit with shareholders.

     Toyota Motor is the top dividend payer among big corporations for the year ended March 31, returning a whopping 631.3 billion yen ($5.14 billion) in cash, a 20.7% jump from a year earlier. The figure is more than twice second-place NTT Docomo's 254.8 billion yen, which represents a 2.4% increase. The ranking included only those companies that have released fiscal 2014 results and for which data for the last three years is available.

     Generally speaking, the stronger earning power a company has, the more it can afford to pay in dividends. Toyota became the first Japanese company ever to earn a net profit exceeding 2 trillion yen last fiscal year. Combined with stock buybacks, the automaker is returning some 1 trillion yen to shareholders, or close to half of what it earned.

     Japanese companies are listening to investors who encourage them to use their money efficiently rather than saving for a rainy day.

     Fanuc, which came in 12th, is more than tripling its dividend payouts to 124.5 billion yen. The industrial robot manufacturer has raised its payout policy from 30% of net profit to 60%. Boasting some 1 trillion yen in cash on hand, the company "is responding to investor calls for higher dividends," in the words of President Yoshiharu Inaba.

     Nippon Telegraph and Telephone is also "working to hike dividends," says President Hiroo Unoura. The telecommunications company ranked fifth with 195.1 billion yen in dividends, up 2%.

     Some companies continue offering generous dividends despite weak results. Takeda Pharmaceutical is paying out 142.1 billion yen even though it incurred a 145.7 billion yen net loss. The drugmaker is committed to maintaining its per-share dividend, says President Christophe Weber. Honda Motor saw its net profit slide 9%, but is lifting its payout 7.3% to 158.6 billion yen.

     Increased dividends reduce stated capital, which helps improve return on equity, a measure of earnings efficiency. KDDI, which came in 10th in the rankings of dividend payments, and Bridgestone, which ranked 16th, boast ROE of around 15% for fiscal 2014 -- far above the 8.2% average for leading listed companies. The telecom operator and the tire maker are boosting their payouts by 31.4% and 75.5%, respectively.

     Japanese companies likely will continue the generosity trend this fiscal year, with the aggregate dividend for all listed companies set to top 10 trillion yen for the first time ever. Docomo has already pledged to pay 70 yen a share, up 5 yen. Corporate managers are typically reluctant to cut dividends once they raise them, so the higher payouts show their bullishness about their businesses.

(Nikkei)

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