YAMADA Consulting GroupLtd's (TSE:4792) Dividend Will Be ¥38.00

YAMADA Consulting Group Co.,Ltd. (TSE:4792) will pay a dividend of ¥38.00 on the 5th of December. This makes the dividend yield 4.3%, which will augment investor returns quite nicely.

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YAMADA Consulting GroupLtd'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. Before making this announcement, YAMADA Consulting GroupLtd was paying out a fairly large proportion of earnings, and it wasn't generating positive free cash flows either. We think that this practice can make the dividend quite risky in the future.

Looking forward, earnings per share could rise by 15.0% 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 71% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for YAMADA Consulting GroupLtd

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 ¥22.50 in 2015, and the most recent fiscal year payment was ¥77.00. This means that it has been growing its distributions at 13% per annum over that time. YAMADA Consulting GroupLtd 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.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. YAMADA Consulting GroupLtd has impressed us by growing EPS at 15% per year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

Our Thoughts On YAMADA Consulting GroupLtd's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for YAMADA Consulting GroupLtd (1 is significant!) that you should be aware of before investing. Is YAMADA Consulting GroupLtd 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.