Yushin Precision Equipment (TSE:6482) Is Paying Out A Dividend Of ¥10.00

Yushin Precision Equipment Co., Ltd. (TSE:6482) will pay a dividend of ¥10.00 on the 11th of June. The dividend yield will be 2.9% based on this payment which is still above the industry average.

View our latest analysis for Yushin Precision Equipment

Yushin Precision Equipment's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Yushin Precision Equipment was earning enough to cover the dividend, but free cash flows weren't positive. 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.

EPS is set to fall by 1.9% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 42%, which is definitely feasible to continue.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥10.00 in 2014, and the most recent fiscal year payment was ¥20.00. This means that it has been growing its distributions at 7.2% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Yushin Precision Equipment might have put its house in order since then, but we remain cautious.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Yushin Precision Equipment's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

Yushin Precision Equipment's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Yushin Precision Equipment's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

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. For example, we've picked out 1 warning sign for Yushin Precision Equipment that investors should know about before committing capital to this stock. Is Yushin Precision Equipment not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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