Dividend per share |
10-year CAGR* % |
5-year CAGR % |
3-year CAGR % |
2-year CAGR % |
1-year growth |
|---|---|---|---|---|---|
Mean |
11.2% |
13.1% |
13.7% |
15.8% |
18.9% |
Median |
11.9% |
11.8% |
12.6% |
13.4% |
14.3% |
Cap weighted (current) |
11.4% |
13.6% |
15.3% |
16.5% |
19.6% |
Equities
Japanese dividends: The trend is your friend
4 min read 13 Oct 25
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Dividends in Japan have been growing in the past decade, and the trend is accelerating. Carl Vine, Co-Head of Asia Pacific Equities, explains why dividend growth is a compelling element of the Japan “reform” story – and why he believes the trend is set to continue.
For years, the “Japan reform” narrative has been wheeled out like a trusty old prop. Governance codes, the unwinding of cross-shareholdings and Tokyo Stock Exchange scoldings – these are all familiar storylines.
Some worry that the narrative is tired. Understandable. But if market observers want stories, they should consider reading novels.
If they want facts to compare against an investment thesis, they might start with Japanese dividends. And the facts on this front are compelling; they suggest a pattern of ongoing acceleration in impressive, delivered outcomes.
Growing dividends
Across MSCI Japan’s current benchmark constituents, dividend-per-share growth has compounded at 11-12% per annum, on average, for a decade. This accelerated into the mid-teens over the past three years and touched nearly 20% growth over the past 12 months. That’s not a narrative, that’s a trend.
Source: M&G, Bloomberg, September 2025. *CAGR is the compound annual growth rate.
Importantly, there’s plenty of reason to believe that there’s more dividend love to come. Take Toyota as an example. Japan’s largest company, with its newly minted 20% return-on-equity North Star, can, in our view, plausibly be expected to compound dividends per share growth in the mid-teens for several years to come.
JR East, as another example, one of the world’s largest passenger railways, looks set to almost double its dividends per share in the coming three years! These are emblematic, not exceptional.
Scope to continue
In the last decade or so, Japanese listed earnings have grown at a high single-digit compound growth rate. With nominal GDP growing over the same period at less than 1%, this has been driven by self-help, a process that we see is still accelerating.
Dividends have grown faster than earnings over this time thanks to rising payout ratios. With payouts in the MSCI Japan Index today averaging ~40% currently, we think there’s ample scope for dividends per share to continue to rise faster than earnings, especially when the impressive and accelerating trend in buybacks is considered.
Buyback plans announced (JPY trillion) |
2018 FY |
2019 FY |
2020 FY |
2021 FY |
2022 FY |
2023 FY |
2024 FY |
2025 1Q |
|---|---|---|---|---|---|---|---|---|
1Q |
1.8 |
4.1 |
1.4 |
2.7 |
4.4 |
4.2 |
7.8 |
9.3 |
2Q |
0.9 |
1.1 |
1.5 |
1.2 |
1.4 |
1.3 |
2.9 |
|
3Q |
2.5 |
1.2 |
1.0 |
2.7 |
2.2 |
2.7 |
5.2 |
|
4Q |
1.8 |
1.3 |
0.9 |
1.5 |
1.4 |
1.6 |
3.1 |
|
FY |
7.0 |
7.7 |
4.8 |
8.1 |
9.4 |
10.2 |
18.9 |
|
# of companies |
669 |
825 |
506 |
829 |
863 |
925 |
1148 |
|
Source: M&G, Goldman Sachs, Nomura, September 2025
So perhaps “Japan reform” is a tired story, but it’s a story being written with hard cash, not promises. Given modest payout ratios, an ever-improving governance backdrop, and a dose of competitive pressure from activists… it’s hard not to see this trend compounding.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast, nor a recommendation to purchase or sell any particular security.
