CELMInc (TSE:7367) Is Due To Pay A Dividend Of ¥10.00

CELM,Inc.'s (TSE:7367) investors are due to receive a payment of ¥10.00 per share on 4th of December. This makes the dividend yield 3.0%, which is above the industry average.

See our latest analysis for CELMInc

CELMInc's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, CELMInc's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 8.4% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

CELMInc 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 2 years, which isn't that long in the grand scheme of things. Since 2022, the dividend has gone from ¥9.00 total annually to ¥24.00. This works out to be a compound annual growth rate (CAGR) of approximately 63% a year over that time. 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.

We Could See CELMInc's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that CELMInc has been growing its earnings per share at 8.4% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for CELMInc's prospects of growing its dividend payments in the future.

We Really Like CELMInc's Dividend

Overall, a dividend increase is always good, and we think that CELMInc is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for CELMInc (of which 1 is concerning!) you should know about. Is CELMInc 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com