Takara StandardLtd (TSE:7981) Will Pay A Dividend Of ¥28.00

Takara Standard Co.,Ltd.'s (TSE:7981) investors are due to receive a payment of ¥28.00 per share on 27th of June. This takes the dividend yield to 3.3%, which shareholders will be pleased with.

View our latest analysis for Takara StandardLtd

Takara StandardLtd's Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Takara StandardLtd's dividend was only 41% of earnings, however it was paying out 120% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Unless the company can turn things around, EPS could fall by 1.5% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 47%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of ¥26.00 in 2014 to the most recent total annual payment of ¥56.00. This means that it has been growing its distributions at 8.0% per annum over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Takara StandardLtd hasn't seen much change in its earnings per share over the last five years.

Takara StandardLtd's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Takara StandardLtd's payments are rock solid. While Takara StandardLtd is earning enough to cover the payments, the cash flows are lacking. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Takara StandardLtd that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.