Kyowa Engineering Consultants Co.,Ltd. (TYO:9647) Looks Interesting, And It's About To Pay A Dividend

Kyowa Engineering Consultants Co.,Ltd. (TYO:9647) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 27th of November in order to receive the dividend, which the company will pay on the 28th of February.

Kyowa Engineering ConsultantsLtd's next dividend payment will be JP¥30.00 per share, on the back of last year when the company paid a total of JP¥30.00 to shareholders. Based on the last year's worth of payments, Kyowa Engineering ConsultantsLtd stock has a trailing yield of around 1.0% on the current share price of ¥2985. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Kyowa Engineering ConsultantsLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Kyowa Engineering ConsultantsLtd

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Kyowa Engineering ConsultantsLtd is paying out just 7.7% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 3.0% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Kyowa Engineering ConsultantsLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Kyowa Engineering ConsultantsLtd's earnings have been skyrocketing, up 83% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Kyowa Engineering ConsultantsLtd looks like a promising growth company.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Kyowa Engineering ConsultantsLtd has seen its dividend decline 9.3% per annum on average over the past 10 years, which is not great to see. Kyowa Engineering ConsultantsLtd is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Has Kyowa Engineering ConsultantsLtd got what it takes to maintain its dividend payments? It's great that Kyowa Engineering ConsultantsLtd is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Kyowa Engineering ConsultantsLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while Kyowa Engineering ConsultantsLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for Kyowa Engineering ConsultantsLtd that we recommend you consider before investing in the business.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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