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

Kyudenko Corporation (TSE:1959) has announced that it will pay a dividend of ¥55.00 per share on the 6th of June. This means that the annual payment is 1.8% of the current stock price, which is lower than what the rest of the industry is paying.

View our latest analysis for Kyudenko

Kyudenko's Earnings Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Kyudenko was easily earning enough to cover the dividend. 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 9.7%. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Kyudenko Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of ¥10.00 in 2014 to the most recent total annual payment of ¥115.00. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Kyudenko has only grown its earnings per share at 3.5% per annum over the past five years. While EPS growth is quite low, Kyudenko has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Kyudenko's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Kyudenko has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Kyudenko for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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