TOPPAN Holdings (TSE:7911) Is Due To Pay A Dividend Of ¥28.00

The board of TOPPAN Holdings Inc. (TSE:7911) has announced that it will pay a dividend of ¥28.00 per share on the 2nd of December. Despite this raise, the dividend yield of 1.4% is only a modest boost to shareholder returns.

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TOPPAN Holdings' Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. TOPPAN Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share is forecast to rise by 12.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

Check out our latest analysis for TOPPAN Holdings

TOPPAN Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥36.00 in 2015 to the most recent total annual payment of ¥56.00. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. However, TOPPAN Holdings has only grown its earnings per share at 4.5% per annum over the past five years. If TOPPAN Holdings is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On TOPPAN Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think TOPPAN Holdings will make a great income stock. While TOPPAN Holdings is earning enough to cover the payments, the cash flows are lacking. We don't think TOPPAN Holdings is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for TOPPAN Holdings that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.