The board of Dai-Dan Co., Ltd. (TSE:1980) has announced that it will pay a dividend on the 2nd of December, with investors receiving ¥52.00 per share. However, the dividend yield of 3.2% still remains in a typical range for the industry.
Check out our latest analysis for Dai-Dan
Dai-Dan's Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Dai-Dan is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 11.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 48% by next year, which is in a pretty sustainable range.
Dai-Dan Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥16.00, compared to the most recent full-year payment of ¥104.00. This means that it has been growing its distributions at 21% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Dai-Dan has impressed us by growing EPS at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Dai-Dan's prospects of growing its dividend payments in the future.
In Summary
Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Dai-Dan is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Dai-Dan that investors should take into consideration. Is Dai-Dan not quite the opportunity you were looking for? Why not check out our selection of top 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.
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About TSE:1980
Dai-Dan
Engages in the design, supervision, and construction of electrical, air conditioning, plumbing and sanitary, and firefighting facilities works in Japan.
Solid track record with adequate balance sheet and pays a dividend.
