Senshu Ikeda Holdings (TSE:8714) Has Announced A Dividend Of ¥8.00

The board of Senshu Ikeda Holdings, Inc. (TSE:8714) has announced that it will pay a dividend on the 1st of December, with investors receiving ¥8.00 per share. Although the dividend is now higher, the yield is only 2.4%, which is below the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Senshu Ikeda Holdings' stock price has increased by 64% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Senshu Ikeda Holdings' Payment Expected To Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Senshu Ikeda Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Senshu Ikeda Holdings' payout ratio of 31% is a good sign as this means that earnings decently cover dividends.

If the trend of the last few years continues, EPS will grow by 33.1% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Senshu Ikeda Holdings

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The most recent annual payment of ¥15.00 is about the same as the annual payment 10 years ago. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. It's encouraging to see that Senshu Ikeda Holdings has been growing its earnings per share at 33% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Senshu Ikeda Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Senshu Ikeda Holdings 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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Senshu Ikeda Holdings that you should be aware of before investing. 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.