Corporate governance reforms have strengthened shareholder returns by Japanese companies, driving up total returns combining dividends and share buybacks. Total dividends in FY2025 reached ¥26.2 trillion, while the payout ratio was 38.2%, or 41.2% excluding SoftBank Group, and further expansion of shareholder returns is expected.
Against the backdrop of corporate governance reforms, Japanese companies are strengthening their commitment to shareholder returns. Total dividends in FY2025 reached ¥26.2 trillion, and the payout ratio rose faster than the growth rate of pretax income. The payout ratio was 38.2% for all listed companies and 41.2% excluding SoftBank Group.
According to FY2026 guidance, the proportion of TOPIX500 constituents planning dividend increases reached a record high of 70%. Total dividends are expected to rise 8% from the previous fiscal year, while share buybacks are expected to reach ¥20.0 trillion, up 6.1%. The total payout ratio is expected to reach 65.8%, approaching international levels when dividends and share buybacks are combined.
The amount of share buyback authorization from 1 April to 26 May remained high at ¥8.2 trillion. Companies’ strong shareholder-return orientation, reflecting market share-price levels, continues to draw attention as the total payout ratio rises.
As an approach to stock selection using shareholder-return metrics, the article introduces a preference for high-dividend-yield stocks and stocks with share buybacks priced in among low-P/E stocks. A long-short analysis of TOPIX500 constituents suggests that, among stocks with low forward P/E ratios, those with high dividend yields or high rates of share-count reduction tend to be relatively more likely to be bought.