Corona (TSE:5909) Is Due To Pay A Dividend Of ¥14.00

Corona Corporation (TSE:5909) has announced that it will pay a dividend of ¥14.00 per share on the 3rd of December. This means the annual payment is 3.0% of the current stock price, which is above the average for the industry.

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Corona's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Corona was paying out a fairly large proportion of earnings, and it wasn't generating positive free cash flows either. This is a pretty unsustainable practice, and could be risky if continued for the long term.

Looking forward, earnings per share could rise by 23.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 60% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Corona

Corona Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The last annual payment of ¥28.00 was flat on the annual payment from10 years ago. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Corona has seen EPS rising for the last five years, at 23% per annum. However, Corona isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Corona's payments, as there could be some issues with sustaining them into the future. While Corona is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Corona that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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