Japan Elevator Service HoldingsLtd (TSE:6544) Has Announced That It Will Be Increasing Its Dividend To ¥23.00

Japan Elevator Service Holdings Co.,Ltd. (TSE:6544) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of June to ¥23.00. This takes the annual payment to 1.1% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Japan Elevator Service HoldingsLtd

Japan Elevator Service HoldingsLtd's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Japan Elevator Service HoldingsLtd's dividend was only 39% of earnings, however it was paying out 112% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

The next year is set to see EPS grow by 101.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.

Japan Elevator Service HoldingsLtd Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. Since 2017, the annual payment back then was ¥1.00, compared to the most recent full-year payment of ¥23.00. This implies that the company grew its distributions at a yearly rate of about 57% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Japan Elevator Service HoldingsLtd has grown earnings per share at 24% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Japan Elevator Service HoldingsLtd will make a great income stock. While Japan Elevator Service HoldingsLtd 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Japan Elevator Service HoldingsLtd analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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