Oriental Shiraishi (TSE:1786) Has Announced A Dividend Of ¥7.00

Oriental Shiraishi Corporation (TSE:1786) will pay a dividend of ¥7.00 on the 12th of December. This will take the annual payment to 3.8% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Oriental Shiraishi

Oriental Shiraishi's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Oriental Shiraishi's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 3.7% over the next year. If the dividend continues on this path, the payout ratio could be by next year, which we think can be pretty sustainable going forward.

Oriental Shiraishi's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2022, the dividend has gone from ¥11.00 total annually to ¥14.50. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Over the past five years, it looks as though Oriental Shiraishi's EPS has declined at around 81% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

Our Thoughts On Oriental Shiraishi's Dividend

Overall, we always like to see the dividend being raised, but we don't think Oriental Shiraishi will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Oriental Shiraishi that investors should take into consideration. Is Oriental Shiraishi not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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