Satudora HoldingsLtd (TSE:3544) Is Due To Pay A Dividend Of ¥10.00

Satudora Holdings Co.,Ltd. (TSE:3544) will pay a dividend of ¥10.00 on the 10th of August. This means the annual payment will be 1.2% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Satudora HoldingsLtd

Satudora HoldingsLtd's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before this announcement, Satudora HoldingsLtd was paying out 72% of earnings, but a comparatively small 18% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

If the trend of the last few years continues, EPS will grow by 10.1% over the next 12 months. If the dividend continues on this path, the payout ratio could be 66% by next year, which we think can be pretty sustainable going forward.

Satudora HoldingsLtd Doesn't Have A Long Payment History

It is great to see that Satudora HoldingsLtd has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the annual payment back then was ¥9.00, compared to the most recent full-year payment of ¥10.00. This implies that the company grew its distributions at a yearly rate of about 1.5% over that duration. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Satudora HoldingsLtd has grown earnings per share at 10% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

Satudora HoldingsLtd Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 4 warning signs for Satudora HoldingsLtd you should be aware of, and 1 of them is potentially serious. Is Satudora HoldingsLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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