Corona's (TSE:5909) Dividend Will Be ¥14.00

Corona Corporation's (TSE:5909) investors are due to receive a payment of ¥14.00 per share on 29th of June. This makes the dividend yield 2.9%, which will augment investor returns quite nicely.

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Corona's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the dividend made up 117% of earnings, and the company was generating negative free cash flows. Paying out such a large dividend compared to earnings while also not generating free cash flows is a major warning sign for the sustainability of the dividend as these levels are certainly a bit high.

EPS is set to grow by 13.7% over the next year if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could reach 103%, which probably can't continue without starting to put some pressure on the balance sheet.

See our latest analysis for Corona

Corona Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The payments haven't really changed that much since 10 years ago. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Corona's Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Corona has been growing its earnings per share at 14% a year over the past five years. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Corona's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We don't think Corona is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 Corona you should be aware of, and 1 of them is concerning. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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