IR Japan Holdings (TSE:6035) Is Due To Pay A Dividend Of ¥15.00

IR Japan Holdings, Ltd.'s (TSE:6035) investors are due to receive a payment of ¥15.00 per share on 19th of June. This means the annual payment is 6.4% of the current stock price, which is above the average for the industry.

View our latest analysis for IR Japan Holdings

IR Japan Holdings Is Paying Out More Than It Is Earning

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Looking forward, EPS could fall by 4.9% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 96%, which is definitely a bit high to be sustainable going forward.

IR Japan Holdings' Dividend Has Lacked Consistency

Looking back, IR Japan Holdings' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the annual payment back then was ¥10.00, compared to the most recent full-year payment of ¥83.00. This works out to be a compound annual growth rate (CAGR) of approximately 27% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend's Growth Prospects Are Limited

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. It's not great to see that IR Japan Holdings' earnings per share has fallen at approximately 4.9% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

We're Not Big Fans Of IR Japan Holdings' Dividend

In summary, it's not great to see that the dividend is being cut, but it is probably understandable given that the current payment level was quite high. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

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. For example, we've identified 4 warning signs for IR Japan Holdings (2 are a bit concerning!) that you should be aware of before investing. Is IR Japan Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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