ES-CON JAPAN (TSE:8892) Will Pay A Dividend Of ¥48.00

ES-CON JAPAN Ltd. (TSE:8892) has announced that it will pay a dividend of ¥48.00 per share on the 26th of June. This makes the dividend yield 4.6%, which will augment investor returns quite nicely.

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ES-CON JAPAN's Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, ES-CON JAPAN was paying only paying out a fraction of earnings, but the payment was a massive 225% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

EPS is set to fall by 4.0% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 48%, which is definitely feasible to continue.

Check out our latest analysis for ES-CON JAPAN

ES-CON JAPAN Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥3.00, compared to the most recent full-year payment of ¥48.00. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

ES-CON JAPAN May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. ES-CON JAPAN has seen earnings per share falling at 4.0% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While ES-CON JAPAN 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.

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. Just as an example, we've come across 2 warning signs for ES-CON JAPAN you should be aware of, and 1 of them is a bit concerning. Is ES-CON JAPAN 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.