Tanabe Consulting GroupLtd (TSE:9644) Has Announced That It Will Be Increasing Its Dividend To ¥28.00

Tanabe Consulting Group Co.,Ltd. (TSE:9644) will increase its dividend on the 26th of June to ¥28.00, which is 7.7% higher than last year's payment from the same period of ¥26.00. This takes the dividend yield to 3.5%, which shareholders will be pleased with.

View our latest analysis for Tanabe Consulting GroupLtd

Tanabe Consulting GroupLtd's Projections Indicate Future Payments May Be Unsustainable

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite comfortably covered by Tanabe Consulting GroupLtd'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.

Over the next year, EPS could expand by 6.7% if the company continues along the path it has been on recently. Assuming the dividend continues along recent trends, we think the payout ratio could reach 95%, which probably can't continue without starting to put some pressure on the balance sheet.

Tanabe Consulting GroupLtd Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2020, the annual payment back then was ¥21.50, compared to the most recent full-year payment of ¥46.00. This means that it has been growing its distributions at 16% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Tanabe Consulting GroupLtd Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Tanabe Consulting GroupLtd has been growing its earnings per share at 6.7% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Our Thoughts On Tanabe Consulting GroupLtd's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We don't think Tanabe Consulting GroupLtd is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Tanabe Consulting GroupLtd that investors should take into consideration. Is Tanabe Consulting GroupLtd 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.