As total dividends are expected to reach ¥23 trillion, stock splits are gaining momentum. Tokio Marine split its shares 15-for-1 and Kioxia 3-for-1, while moves to reduce the minimum investment amount below ¥500,000 are encouraging greater participation by individual investors.
Total dividends at listed companies for the fiscal year ending March 2027 are expected to rise 6% from the previous fiscal year to ¥23 trillion, marking a record high for the sixth consecutive year as Japanese companies strengthen shareholder returns. While more companies are increasing their dividends, concerns have been raised about unsustainable increases that could undermine financial soundness.
The sharp increase in stock splits is partly driven by the Tokyo Stock Exchange's request for investment units below ¥500,000. A stock split divides one share into multiple shares, lowering the minimum investment amount and making it easier for individual investors to buy shares. The theoretical market capitalization is generally considered unchanged after the split.
Examples include Tokio Marine's 15-for-1 split and Kioxia's 3-for-1 split. As of the end of September, 47 companies had carried out stock splits. The splits are expected to change the ownership ratios of major shareholders and improve market liquidity.
However, stronger shareholder returns are linked to the long-term soundness of a company's financial base. Investors should therefore be cautious of excessive dividend increases not supported by earnings or increases intended merely to improve appearances, and individual investors need to assess companies' operating performance and financial condition.