Ki-Star Real EstateLtd (TSE:3465) Is Paying Out A Larger Dividend Than Last Year

Ki-Star Real Estate Co.,Ltd's (TSE:3465) dividend will be increasing from last year's payment of the same period to ¥83.00 on 25th of June. This will take the dividend yield to an attractive 3.1%, providing a nice boost to shareholder returns.

See our latest analysis for Ki-Star Real EstateLtd

Ki-Star Real EstateLtd's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Ki-Star Real EstateLtd 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.

Over the next year, EPS is forecast to expand by 24.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 27%, which is in the range that makes us comfortable with the sustainability of the dividend.

Ki-Star Real EstateLtd's Dividend Has Lacked Consistency

Ki-Star Real EstateLtd has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2016, the dividend has gone from ¥42.50 total annually to ¥148.00. This means that it has been growing its distributions at 15% per annum over that time. Ki-Star Real EstateLtd 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.

The Dividend Looks Likely To Grow

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. Ki-Star Real EstateLtd has seen EPS rising for the last five years, at 15% per annum. Ki-Star Real EstateLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Ki-Star Real EstateLtd's Dividend

Overall, we always like to see the dividend being raised, but we don't think Ki-Star Real EstateLtd will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Ki-Star Real EstateLtd you should be aware of, and 1 of them is a bit concerning. Is Ki-Star Real EstateLtd 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.