SpaceLtd (TSE:9622) Has Announced A Dividend Of ¥27.00

Space Co.,Ltd. (TSE:9622) will pay a dividend of ¥27.00 on the 10th of September. This makes the dividend yield 4.7%, which is above the industry average.

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SpaceLtd's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, SpaceLtd was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. The business is earning enough to make the dividend feasible, but the cash payout ratio of 78% indicates it is more focused on returning cash to shareholders than growing the business.

If the trend of the last few years continues, EPS will grow by 7.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for SpaceLtd

SpaceLtd's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The payments haven't really changed that much since 6 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

SpaceLtd Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. SpaceLtd has seen EPS rising for the last five years, at 7.7% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Our Thoughts On SpaceLtd's Dividend

In summary, while it's always good to see the dividend being raised, we don't think SpaceLtd's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments SpaceLtd has been making. We would probably look elsewhere for an income investment.

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. As an example, we've identified 1 warning sign for SpaceLtd that you should be aware of before investing. 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.