Integrated Design & Engineering HoldingsLtd (TSE:9161) Will Pay A Dividend Of ¥125.00

The board of Integrated Design & Engineering Holdings Co.,Ltd. (TSE:9161) has announced that it will pay a dividend on the 12th of September, with investors receiving ¥125.00 per share. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.

View our latest analysis for Integrated Design & Engineering HoldingsLtd

Integrated Design & Engineering HoldingsLtd's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. The last payment made up 87% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to rise exponentially over the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 26% which is fairly sustainable.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥37.50, compared to the most recent full-year payment of ¥125.00. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Integrated Design & Engineering HoldingsLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Dividend Growth Is Doubtful

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. In the last five years, Integrated Design & Engineering HoldingsLtd's earnings per share has shrunk at approximately 7.5% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On Integrated Design & Engineering HoldingsLtd's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Integrated Design & Engineering HoldingsLtd's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Integrated Design & Engineering HoldingsLtd that you should be aware of before investing. 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.