G-7 Holdings (TSE:7508) Will Pay A Dividend Of ¥20.00

The board of G-7 Holdings Inc. (TSE:7508) has announced that it will pay a dividend on the 2nd of December, with investors receiving ¥20.00 per share. This means the annual payment is 3.0% of the current stock price, which is above the average for the industry.

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G-7 Holdings' Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, G-7 Holdings' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 6.2% over the next year. If the dividend continues on this path, the payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for G-7 Holdings

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ¥11.25 in 2015, and the most recent fiscal year payment was ¥40.00. This means that it has been growing its distributions at 14% per annum over that time. G-7 Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

We Could See G-7 Holdings' Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. G-7 Holdings has seen EPS rising for the last five years, at 9.2% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for G-7 Holdings' prospects of growing its dividend payments in the future.

We Really Like G-7 Holdings' Dividend

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for G-7 Holdings that you should be aware of before investing. 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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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.