COSMOS Pharmaceutical (TSE:3349) Will Pay A Dividend Of ¥37.50

COSMOS Pharmaceutical Corporation's (TSE:3349) investors are due to receive a payment of ¥37.50 per share on 12th of February. This takes the annual payment to 1.0% of the current stock price, which unfortunately is below what the industry is paying.

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COSMOS Pharmaceutical's Projected Earnings Seem Likely To Cover Future Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. COSMOS Pharmaceutical 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.

The next year is set to see EPS grow by 6.2%. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for COSMOS Pharmaceutical

COSMOS Pharmaceutical Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥15.00, compared to the most recent full-year payment of ¥75.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See COSMOS Pharmaceutical's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. COSMOS Pharmaceutical has seen EPS rising for the last five years, at 5.3% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On COSMOS Pharmaceutical's Dividend

In summary, while it's always good to see the dividend being raised, we don't think COSMOS Pharmaceutical's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for COSMOS Pharmaceutical for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.