ALCONIX Corporation's (TSE:3036) investors are due to receive a payment of ¥32.00 per share on 20th of June. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.
View our latest analysis for ALCONIX
ALCONIX's Future Dividends May Potentially Be At Risk
A big dividend yield for a few years doesn't mean much if it can't be sustained. Before this announcement, ALCONIX was paying out 77% of earnings, but a comparatively small 72% of free cash flows. This leaves plenty of cash for reinvestment into the business.
If the company can't turn things around, EPS could fall by 8.9% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 101%, which is definitely a bit high to be sustainable going forward.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥15.00, compared to the most recent full-year payment of ¥64.00. This means that it has been growing its distributions at 16% per annum 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.
Dividend Growth May Be Hard To Come By
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. ALCONIX has seen earnings per share falling at 8.9% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think ALCONIX's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, ALCONIX has 5 warning signs (and 2 which are concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
About TSE:3036
ALCONIX
Imports, exports, and sells non-ferrous metal products in Japan and internationally.
Established dividend payer moderate.
