RAIZNEXT (TSE:6379) Is Due To Pay A Dividend Of ¥45.00

The board of RAIZNEXT Corporation (TSE:6379) has announced that it will pay a dividend on the 8th of December, with investors receiving ¥45.00 per share. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

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RAIZNEXT's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. RAIZNEXT is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

EPS is set to fall by 8.6% over the next 12 months if recent trends continue. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 81%, meaning that most of the company's earnings is being paid out to shareholders.

View our latest analysis for RAIZNEXT

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from ¥30.00 total annually to ¥91.00. This means that it has been growing its distributions at 12% per annum over that time. 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 May Be Hard To Come By

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. RAIZNEXT has seen earnings per share falling at 8.6% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

RAIZNEXT's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think RAIZNEXT will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for RAIZNEXT (of which 1 is a bit unpleasant!) you should know about. Is RAIZNEXT 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.