2025.06.09

Is the Big 5 Enough? — Why It’s Time to Add Sojitz & Toyota Tsusho

s7tachi

1. Introduction | Why Look Beyond Japan’s “Big 5” Trading Houses?

Key takeaway The recent surge in the Big 5’s share prices has squeezed dividend yields, eroding their appeal for income‑focused investors. By contrast, Sojitz and Toyota Tsusho still offer attractive yields and growth drivers the Big 5 lack, making them an ideal “missing puzzle piece” for a balanced portfolio.

Background – Big 5 rally leaves few pull‑back opportunities

Between 2024 and 2025 the Big 5’s share‑price average rose 70 %+.
Mitsubishi Corp. and Itochu each passed a ¥10 trillion market cap; dividend yields fell into the low‑3 % range.
Valuations have re‑rated: Mitsubishi Corp. now trades at PBR 1.1×, Itochu at 2.1×—hardly “value stocks” any more.

The income‑investor’s dilemma

Readers who buy only on a “progressive dividend + 4 % yield” rule now face far poorer reinvestment efficiency.
Waiting for a 4 % pull‑back also sacrifices diversification in the meantime.

What makes Sojitz & Toyota Tsusho structurally different?

Company	Core focus	Stand‑out strengths	Current yield*	PBR*
Sojitz	ASEAN fertilizer, aerospace, non‑resource 70 %+	2026 plan commits to DOE 4.5 % + progressive payout	4.7 %	0.9×
Toyota Tsusho	Auto value chain + Africa	Toyota Group synergy / network in all 54 African nations	3.2 %	1.0×
Based on closing prices 6 Jun 2025; yields use FY24/25 dividend guidance. Source:* FY2025 results & integrated reports (May 2025).

Portfolio benefits

Cheap yield: Sojitz already north of 4 %; Toyota Tsusho has ample room to reach 4 % on a pull‑back.
Non‑resource & EM growth: Helps hedge commodity cycles and global downturns.
Upgraded shareholder returns: Both firms pledge progressive dividends plus buy‑backs; market is slowly re‑rating them above PBR 1×.

In this series we first explain why now for these two firms by comparing them with the Big 5, then deep‑dive each company in follow‑up articles. Next up: the trading‑house model and a Big 5 overview to set clear comparison baselines.

2. Trading‑House Basics & Big 5 Snapshot

Key takeaway Japanese sōgō‑shōsha earn on two pillars—trading and equity investment. While the Big 5 share scale and global reach, they differ in resource exposure and payout policies.

2‑1. Shared structure

Role	Examples	Revenue source	Key risks
Trading	Oil, LNG, grains, steel, textiles	Spread & fee income	Price & FX volatility
Equity investment	Copper mines, renewables, Lawson CVS	Equity earnings, dividends, disposals	Project & asset‑value swings

Trading = cash cow; Investments = growth driver. Heavy proprietary investing means valuation is best analysed with PBR/ROE, like financials.

2‑2. Big 5 quick facts (FY2024)

Company	Rev. (¥ tn)	Core businesses	Yield*	PBR	Notes
Mitsubishi Corp.	≈22	Resources, infra, Lawson	3.8 %	1.1×	Buffett stake; LNG strength
Mitsui & Co.	≈15	Energy, machinery, chemicals	2.7 %	1.2×	Non‑resource expansion
Itochu	≈14	Food, apparel, ICT	3.0 %	2.1×	Consumer‑centric
Sumitomo Corp.	≈8	Metals, social infra	3.6 %	1.0×	Machinery & real estate up
Marubeni	≈8	Agri‑food, power, logistics	4.0 %	0.9×	Aggressive renewables
*Yields on 6 Jun 2025 close.

2‑3. Payout similarities & differences

All Big 5 promise either progressive or stable dividends, posting 7‑11 straight years of increases.
Divergences:
- Mitsubishi, Mitsui — 40 % total‑return ratio + flexible buy‑backs.
- Itochu — DOE‑driven, longest increase streak.
- Marubeni — stepping payout from 25 → 30 → 40 %.
- Sumitomo — 33 % payout target + DOE cap 3 %.

Baseline set—next we compare Sojitz & Toyota Tsusho against those yardsticks.

3. Big 5 vs. Sojitz & Toyota Tsusho

Key takeaway Though smaller, Sojitz and Toyota Tsusho secure solid ROE via niche focus and agility. Valuations remain cheaper, while return policies tighten. Their geographic and sector mixes add true diversification.

3‑1. Scale & business mix (FY2024)

Metric	Sojitz	Toyota Tsusho	Big 5 avg.*
Revenue	¥2.2 tn	¥14.3 tn	≈¥13.4 tn
Op. profit	¥115 bn	¥430 bn	≈¥410 bn
Ecosystem	Fertilizer, aircraft leasing	Toyota value chain, Africa	Resource majors, multisector
Edge	ASEAN agri & aerospace	Toyota tie‑up & Africa moat	Scale & resource equity
*Simple average of the Big 5.

3‑2. Dividend & buy‑back stance

Company	Fwd. yield	Price for 4 %	Inc. yrs	PBR	Note
Sojitz	4.7 %	≈¥2,550	5	0.9×	DOE 4.5 % + ¥30 bn buy‑back cap
Toyota Tsusho	3.2 %	≈¥7,500	8	1.0×	Payout lift 30 → 35 %
Mitsubishi Corp.	3.8 %	≈¥2,750	11	1.1×	40 % total return + mega buy‑back
Itochu	3.0 %	≈¥4,700	12	2.1×	DOE 5 % progressive
Marubeni	4.0 %	≈¥1,480	7	0.9×	Phased 40 % payout target

3‑3. Growth, geography, non‑resource tilt

Indicator	Sojitz	Toyota Tsusho	Big 5 avg.
Non‑resource profit	70 %	60 %	≈45 %
EM revenue share	35 % (ASEAN)	40 % (Africa)	≈25 %
2025‑27 renewables capex	¥120 bn	¥300 bn	¥280 bn
MSCI ESG rating	BBB	A	A–AA

Sojitz rides ASEAN agri‑food demand; Toyota Tsusho dominates Africa’s auto & renewable build‑out. Both counterbalance the Big 5’s still 50 %+ resource dependence.

4. Why These Two Are the “Next Move”

Key takeaway With Big 5 yields compressed, Sojitz & Toyota Tsusho bring cheap yield × structural growth.

4‑1. Practical portfolio add‑on

Factor	Current Big 5	Add Sojitz & T/T	Diversification gain
Sector	50 % resources / 50 % non	60‑70 % non‑resource	Lower commodity cyclicality
Region	N. America, Mid‑East, Aus.	ASEAN & Africa heavy	Capture EM growth
Yield band	≈3 %	3‑5 %	Lift income floor
PBR	>1.0 (re‑rated)	≈<1.0	Re‑rating upside

4‑2. Re‑assessing risk & return

Return drivers: Sojitz’s agri‑fertilizer cycle; Toyota Tsusho’s African auto boom.
Key risks: ① EM political risk, ② Toyota sales cycle reliance (T/T), ③ Higher funding costs (Sojitz).
Mitigation: Cap each at 5‑10 % of portfolio, consider USD‑listed alternatives where available, reinvest dividends with cost averaging.

5. Coming Up Next — Deep‑Dives

Key takeaway This was the comparison. Next articles will dissect each firm’s fundamentals for concrete investment calls.

5‑1. Scheduled topics

Strategy & segment ROIC
Asset quality & balance‑sheet health
Shareholder‑return scenarios
ESG & renewables outlook

Update policy: First deep‑dive to drop early July 2025—follow the blog and X (Twitter) for alerts!

6. Note for Overseas Investors

Item	Sojitz	Toyota Tsusho	Details
ADR	None	None	No OTC symbols; trade Tokyo directly
Major brokers	IBKR, Charles Schwab	Same	Use tickers 2768.T / 8015.T
Withholding tax	20.315 % JP source; treaty refunds possible	Same	US residents may claim credit via Form 1116
FX impact	Yen dividends → USD = FX risk	Same	Yen weakness lifts effective yield
IR access	English site & integrated report	Same	Quarterly results often JP‑only

Tip: Smooth FX swings by reinvesting yen dividends quarterly (dollar‑cost averaging).

7. Disclaimer

This article provides general information only and does not constitute investment advice or a solicitation to buy or sell any security. All figures (earnings, dividends, prices) are based on public data as of 6 Jun 2025 and may change without notice. Forward‑looking statements involve uncertainties; actual results may differ materially. Tax treatment varies by jurisdiction—consult a qualified advisor if needed.

ABOUT ME