Japan firms' combined FY 2006 dividends total record 6 trillion yen

The total value of dividends that about 1,380 major Japanese companies plan to pay for fiscal 2006 through March 31 has hit a record high of nearly 6 trillion yen, with about half the companies boosting their payouts on the strength of robust earnings, according to a recent survey conducted by the Shinko Research Institute.

The think tank estimates that payments to be made by the firms, which are listed on the First Section of the Tokyo Stock Exchange, will increase by 14.9 percent over the previous fiscal year to 5,926.6 billion yen.

Of the firms, 652 or some 47 percent said they plan to raise or resume dividend payments for fiscal 2006, the think tank said.

The combined dividend payments for the just-ended fiscal year are expected to top 6 trillion yen when the dividend payment plans of companies that are yet to be covered by the institute's survey become available.

The number of companies boosting dividends is also likely to exceed the 654 recorded in the previous year.

The ratio of dividends to net profits for fiscal 2006 is so far estimated at 23.5 percent, up from 21.7 percent for fiscal 2005.

Dividend rises are notable in steel, pharmaceutical and other industries that see increases in global mergers and acquisitions.

Companies in these industries may be willing to keep their share prices high by raising dividends to help defend themselves from hostile takeover bids, according to the institute.

''Firms may expect that dividend hikes could encourage individual investors to become stable shareholders'' who would be helpful in defending against hostile bids, the institute's analyst Tomohiro Inagaki said.

Dividend hikes are also interpreted as a response to the growing demand for higher dividends. In recent years, foreign investment funds have taken advantage of their massive stakes in Japanese firms to request greater dividend payments.