Daiseki Co.,Ltd. (TSE:9793) will pay a dividend of ¥33.00 on the 26th of May. The dividend yield will be in the average range for the industry at 1.9%.
View our latest analysis for DaisekiLtd
DaisekiLtd's Payment Could Potentially Have Solid Earnings Coverage
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, DaisekiLtd's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 9.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from ¥20.00 total annually to ¥67.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. DaisekiLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
We Could See DaisekiLtd's Dividend Growing
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. DaisekiLtd has impressed us by growing EPS at 9.2% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
DaisekiLtd Looks Like A Great Dividend Stock
In general, we don't like to see the dividend being cut, especially when the company has such high potential like DaisekiLtd does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. As an example, we've identified 1 warning sign for DaisekiLtd that you should be aware of before investing. Is DaisekiLtd 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.
About TSE:9793
DaisekiLtd
Engages industrial waste treatment and resource recycling activities in Japan.
Flawless balance sheet, good value and pays a dividend.
