EnBio Holdings (TSE:6092) Is Paying Out A Dividend Of ¥8.00

The board of EnBio Holdings, Inc (TSE:6092) has announced that it will pay a dividend of ¥8.00 per share on the 12th of June. Including this payment, the dividend yield on the stock will be 1.4%, which is a modest boost for shareholders' returns.

Check out our latest analysis for EnBio Holdings

EnBio Holdings' Payment Could Potentially Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, EnBio Holdings' earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 17.3% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 6.9%, which is in the range that makes us comfortable with the sustainability of the dividend.

EnBio Holdings Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. There hasn't been much of a change in the dividend over the last 3 years. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that EnBio Holdings has been growing its earnings per share at 17% a year over the past five years. EnBio Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While EnBio Holdings is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

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 2 warning signs for EnBio Holdings (1 is potentially serious!) that you should be aware of before investing. Is EnBio Holdings 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.