"Dividends are a Promise" Japanese Listed Companies' Dividends Near 20 Trillion Yen... Should I Invest Too?

【Tokyo Correspondent = Kim Kyung-min】 "Even though profits decreased, dividends increased."
Japanese companies are changing the paradigm of their dividend policies. The total dividend for the fiscal year ending March 2026 (April 2025~March 2026) is expected to approach 20 trillion yen (approximately 188 trillion won) for the first time ever. Japanese companies are shifting towards maintaining or even increasing dividends despite declining net profits, returning more cash to shareholders. In a situation where real wages are not rising, dividends are becoming a new source of consumption for Japanese households. It is also a trend worth noting for Korean individual investors who desire stable dividends.

According to Nihon Keizai Shimbun (Nikkei) on the 11th, the total dividends for about 2,300 listed companies with March settlements are expected to reach 19.99 trillion yen for the fiscal year ending March 2026, a 3% increase compared to the previous year. This marks the fifth consecutive year of record highs.
Notably, many companies are increasing dividends even as net profits are expected to decline. About 250 companies, over 10% of the total, are expected to increase or maintain dividends despite anticipated net profit declines this fiscal year. This is an increase of 30 companies compared to the beginning of the previous fiscal year.
For example, Toyota Motor Corporation plans to increase its annual dividend by 5 yen to 95 yen, despite an expected 35% decrease in net profit. Mitsui & Co. expects profits to decline due to falling resource prices and the strong yen, but plans to increase dividends by 15 yen to 115 yen. Takeda Pharmaceutical Company and Ricoh are also expanding dividends, citing improved capital efficiency.
The background for dividend expansion includes pressure from the Tokyo Stock Exchange (TSE). Since last year, the TSE has strongly demanded that listed companies manage their capital costs. As of the end of March 2024, the cash assets of prime listed companies reached a record high of 112 trillion yen. In a situation where companies are pressured on how to utilize their accumulated funds, shareholder returns have become the most direct solution.

In the past, Japanese companies followed a profit-linked dividend policy, giving dividends when profits were made and reducing them when profits declined. However, recently, more companies are adopting the Dividend on Equity (DOE) method. DOE sets a fixed percentage of capital to be returned to shareholders, regardless of profit levels. This structure provides long-term investors with confidence as dividends do not fluctuate sharply even if profits decline.
For instance, Citizen Watch increased its dividend by 2 yen to 47 yen using the DOE method. Ricoh also increased its dividend by 2 yen to 40 yen. As companies present clear dividend standards and adhere to these principles, shareholder trust is increasing.
The difference with Korean companies is clear. In Korea, dividends are often the first to be reduced when profits decrease, and the lack of consistency in dividend policies is frequently criticized. In contrast, in Japan, the perception that "dividends are a promise of management" is spreading, and dividend stability itself is becoming directly linked to corporate credibility.


This dividend expansion is also having a positive impact on Japan's domestic economy. Japanese individual investors own about 20% of all listed stocks. It is estimated that approximately 3.5 trillion yen of the total dividend amount will flow directly into households. This serves as an important means of supporting consumption in a situation where real wages are declining.
According to the Monthly Labor Statistics of the Ministry of Health, Labour and Welfare of Japan, real wages in May 2025 decreased by 2.9% compared to the same month of the previous year. This is the largest decline since September 2023. Dai-ichi Life Research Institute reported that the total dividend amount is expected to boost Japan's real GDP by 0.1 percentage points.
Policy incentives are also being supported. The Japanese government is expanding and reforming the small investment tax exemption system (NISA) from 2024 to attract individual investors. Companies are strengthening their DOE-based dividend policies in line with this trend.
This is also a noteworthy change for Korean individual investors. For those seeking stable dividends, Japanese stocks can be an attractive option. Especially with the combination of a weak yen, structural reforms, and an increase in high-dividend stocks, interest in dividend-focused investment in the Japanese market is gradually growing.

km@fnnews.com Kim Kyung-min Reporter