Nissei Plastic IndustrialLtd (TSE:6293) Will Pay A Dividend Of ¥15.00

Nissei Plastic Industrial Co.,Ltd. (TSE:6293) will pay a dividend of ¥15.00 on the 4th of December. This means the annual payment is 3.8% of the current stock price, which is above the average for the industry.

See our latest analysis for Nissei Plastic IndustrialLtd

Nissei Plastic IndustrialLtd's Projections Indicate Future Payments May Be Unsustainable

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. This high of a dividend payment could start to put pressure on the balance sheet in the future.

If the company can't turn things around, EPS could fall by 35.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 428%, which could put the dividend in jeopardy if the company's earnings don't improve.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from ¥8.00 total annually to ¥35.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Nissei Plastic IndustrialLtd's earnings per share has shrunk at 35% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Nissei Plastic IndustrialLtd's Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Nissei Plastic IndustrialLtd make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good 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. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 5 warning signs for Nissei Plastic IndustrialLtd (of which 3 can't be ignored!) you should know about. Is Nissei Plastic IndustrialLtd 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.