FUJIKURA COMPOSITES (TSE:5121) Will Pay A Dividend Of ¥33.00

The board of FUJIKURA COMPOSITES Inc. (TSE:5121) has announced that it will pay a dividend on the 29th of June, with investors receiving ¥33.00 per share. This takes the dividend yield to 3.3%, which shareholders will be pleased with.

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FUJIKURA COMPOSITES' Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, FUJIKURA COMPOSITES' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 11.1% over the next year. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for FUJIKURA COMPOSITES

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. The annual payment during the last 10 years was ¥12.00 in 2015, and the most recent fiscal year payment was ¥66.00. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. FUJIKURA COMPOSITES has impressed us by growing EPS at 90% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like FUJIKURA COMPOSITES' Dividend

Overall, a dividend increase is always good, and we think that FUJIKURA COMPOSITES is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for FUJIKURA COMPOSITES that investors should take into consideration. 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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