TACHI-S (TSE:7239) Has Announced A Dividend Of ¥51.90

TACHI-S Co., Ltd. (TSE:7239) will pay a dividend of ¥51.90 on the 4th of June. This takes the dividend yield to 5.9%, which shareholders will be pleased with.

Check out our latest analysis for TACHI-S

TACHI-S' Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by TACHI-S' earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 19.2% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 69%, which we are pretty comfortable with and we think is feasible on an earnings basis.

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 ¥16.00 in 2015, and the most recent fiscal year payment was ¥103.80. This means that it has been growing its distributions at 21% per annum over that time. 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 see if earnings per share is growing. TACHI-S has impressed us by growing EPS at 62% per year over the past five years. TACHI-S is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

TACHI-S Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, TACHI-S has 3 warning signs (and 1 which is significant) we think you should know about. 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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