Kyudenko (TSE:1959) Is Due To Pay A Dividend Of ¥55.00

Kyudenko Corporation (TSE:1959) will pay a dividend of ¥55.00 on the 6th of June. This means that the dividend yield is 2.0%, which is a bit low when comparing to other companies in the industry.

View our latest analysis for Kyudenko

Kyudenko's Payment Has 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. However, prior to this announcement, Kyudenko's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 8.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Kyudenko Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥10.00 in 2014, and the most recent fiscal year payment was ¥115.00. This means that it has been growing its distributions at 28% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 3.5% per annum over the last five years, which admittedly is a bit slow. If Kyudenko is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Kyudenko's Dividend

Overall, we think that Kyudenko could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Kyudenko analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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