The board of Artner Co.,Ltd. (TSE:2163) has announced that it will pay a dividend of ¥40.00 per share on the 28th of April. This makes the dividend yield 4.4%, which is above the industry average.
Check out our latest analysis for ArtnerLtd
ArtnerLtd's Projected Earnings Seem Likely To Cover Future Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, ArtnerLtd's was paying out quite a large proportion of earnings and 91% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but it is still in a reasonable range to continue with.
Over the next year, EPS could expand by 14.5% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 67%, which is in the range that makes us comfortable with the sustainability of the dividend.
ArtnerLtd Doesn't Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of ¥38.00 in 2022 to the most recent total annual payment of ¥80.00. This works out to be a compound annual growth rate (CAGR) of approximately 45% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. ArtnerLtd has impressed us by growing EPS at 14% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think ArtnerLtd's payments are rock solid. While ArtnerLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.
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. Just as an example, we've come across 2 warning signs for ArtnerLtd you should be aware of, and 1 of them can't be ignored. Is ArtnerLtd 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.
About TSE:2163
ArtnerLtd
Provides worker dispatching and employment placement services in Japan and internationally.
Flawless balance sheet and fair value.
