Yondoshi Holdings' (TSE:8008) Dividend Will Be ¥41.50

The board of Yondoshi Holdings Inc. (TSE:8008) has announced that it will pay a dividend on the 11th of November, with investors receiving ¥41.50 per share. This means the annual payment is 4.3% of the current stock price, which is above the average for the industry.

View our latest analysis for Yondoshi Holdings

Yondoshi Holdings Doesn't Earn Enough To Cover Its Payments

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, the company was paying out 134% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

The next 12 months is set to see EPS grow by 10.2%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 138% over the next year.

Yondoshi Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥25.00 in 2014, and the most recent fiscal year payment was ¥83.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Yondoshi Holdings' earnings per share has shrunk at approximately 8.8% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Yondoshi Holdings' payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would probably look elsewhere for an income investment.

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. Taking the debate a bit further, we've identified 1 warning sign for Yondoshi Holdings that investors need to be conscious of moving forward. Is Yondoshi Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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