Tokyo Sangyo's (TSE:8070) Dividend Will Be ¥18.00

Tokyo Sangyo Co., Ltd.'s (TSE:8070) investors are due to receive a payment of ¥18.00 per share on 5th of December. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.

See our latest analysis for Tokyo Sangyo

Tokyo Sangyo Might Find It Hard To Continue The Dividend

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Even though Tokyo Sangyo is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Recent, EPS has fallen by 67.6%, so this could continue over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.

Tokyo Sangyo Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of ¥24.00 in 2020 to the most recent total annual payment of ¥36.00. This means that it has been growing its distributions at 11% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Tokyo Sangyo's EPS has fallen by approximately 68% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Tokyo Sangyo's Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Tokyo Sangyo make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Tokyo Sangyo that investors should take into consideration. Is Tokyo Sangyo 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.