Yuasa Trading (TSE:8074) Is Due To Pay A Dividend Of ¥76.00

The board of Yuasa Trading Co., Ltd. (TSE:8074) has announced that it will pay a dividend of ¥76.00 per share on the 5th of December. This makes the dividend yield 3.8%, which is above the industry average.

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Yuasa Trading's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Yuasa Trading's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 3.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Yuasa Trading

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 ¥100.00 in 2015, and the most recent fiscal year payment was ¥190.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.6% a year 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. Yuasa Trading might have put its house in order since then, but we remain cautious.

Dividend Growth May Be Hard To Achieve

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. Earnings has been rising at 3.8% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Yuasa Trading has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Yuasa Trading's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 1 warning sign for Yuasa Trading that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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