Japan Elevator Service HoldingsLtd (TSE:6544) Will Pay A Larger Dividend Than Last Year At ¥30.00

The board of Japan Elevator Service Holdings Co.,Ltd. (TSE:6544) has announced that it will be paying its dividend of ¥30.00 on the 24th of June, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 1.2%, which is below the industry average.

Check out our latest analysis for Japan Elevator Service HoldingsLtd

Japan Elevator Service HoldingsLtd's Payment Could Potentially Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Japan Elevator Service HoldingsLtd was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. 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%. If the dividend continues on this path, the payout ratio could be 53% by next year, which we think can be pretty sustainable going forward.

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

Japan Elevator Service HoldingsLtd's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. 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. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Japan Elevator Service HoldingsLtd has grown earnings per share at 25% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

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. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 5 Japan Elevator Service HoldingsLtd analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Japan Elevator Service HoldingsLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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