Procrea Holdings (TSE:7384) Is Due To Pay A Dividend Of ¥25.00

Procrea Holdings, Inc. (TSE:7384) has announced that it will pay a dividend of ¥25.00 per share on the 10th of December. This payment means that the dividend yield will be 3.5%, which is around the industry average.

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Procrea Holdings Will Pay Out More Than It Is Earning

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having paid out dividends for only 3 years, Procrea Holdings does not have much of a history being a dividend paying company. Taking data from Procrea Holdings' last earnings report, the payout ratio is at a decent 25%, meaning that the company is able to pay out its dividend with some room to spare.

If the company can't turn things around, EPS could fall by 52.1% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 242%, which is definitely a bit high to be sustainable going forward.

See our latest analysis for Procrea Holdings

Procrea Holdings Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The payments haven't really changed that much since 3 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though Procrea Holdings' EPS has declined at around 52% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

Procrea Holdings' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Procrea Holdings has been making. This company is not in the top tier of income providing stocks.

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. Taking the debate a bit further, we've identified 2 warning signs for Procrea Holdings that investors need to be conscious of moving forward. 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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