DYNAM JAPAN HOLDINGS (HKG:6889) Will Pay A Larger Dividend Than Last Year At ¥0.1355

The board of DYNAM JAPAN HOLDINGS Co., Ltd. (HKG:6889) has announced that it will be paying its dividend of ¥0.1355 on the 25th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 7.2%, which is above the industry average.

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DYNAM JAPAN HOLDINGS' Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, DYNAM JAPAN HOLDINGS was paying out 95% of earnings and more than 75% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but we don't think that there are necessarily signs that the dividend might be unsustainable.

Unless the company can turn things around, EPS could fall by 20.7% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 5.4%, which is an improvement from where it is currently.

See our latest analysis for DYNAM JAPAN HOLDINGS

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from ¥14.00 total annually to ¥4.58. Dividend payments have fallen sharply, down 67% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. DYNAM JAPAN HOLDINGS' earnings per share has shrunk at 21% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

DYNAM JAPAN HOLDINGS' Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think DYNAM JAPAN HOLDINGS will make a great income stock. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for DYNAM JAPAN HOLDINGS you should be aware of, and 2 of them are potentially serious. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.