Japan Elevator Service HoldingsLtd (TSE:6544) Is Paying Out A Larger Dividend Than Last Year

Japan Elevator Service Holdings Co.,Ltd. (TSE:6544) will increase its dividend from last year's comparable payment on the 24th of June to ¥30.00. This takes the annual payment to 1.1% of the current stock price, which unfortunately is below what the industry is paying.

Japan Elevator Service HoldingsLtd's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. The last dividend was quite comfortably covered by Japan Elevator Service HoldingsLtd's earnings, but it was a bit tighter on the cash flow front. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

The next year is set to see EPS grow by 19.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 53% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Japan Elevator Service HoldingsLtd

Japan Elevator Service HoldingsLtd Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2017, the dividend has gone from ¥1.00 total annually to ¥30.00. This implies that the company grew its distributions at a yearly rate of about 53% over that duration. Japan Elevator Service HoldingsLtd has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Japan Elevator Service HoldingsLtd has impressed us by growing EPS at 25% per year over the past five years. Japan Elevator Service HoldingsLtd is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Our Thoughts On Japan Elevator Service HoldingsLtd's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Japan Elevator Service HoldingsLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 5 analysts we track are forecasting for Japan Elevator Service HoldingsLtd for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.