Sugi HoldingsLtd (TSE:7649) Has Affirmed Its Dividend Of ¥20.00

Sugi Holdings Co.,Ltd.'s (TSE:7649) investors are due to receive a payment of ¥20.00 per share on 28th of May. The dividend yield is 1.0% based on this payment, which is a little bit low compared to the other companies in the industry.

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Sugi HoldingsLtd's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, Sugi HoldingsLtd's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 3.2%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 18%, which is comfortable for the company to continue in the future.

Check out our latest analysis for Sugi HoldingsLtd

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was ¥13.33, compared to the most recent full-year payment of ¥35.00. This means that it has been growing its distributions at 10% per annum over that time. Sugi HoldingsLtd 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.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Sugi HoldingsLtd has grown earnings per share at 13% per year over the past five years. Sugi HoldingsLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Sugi HoldingsLtd Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Sugi HoldingsLtd might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Sugi HoldingsLtd that investors need to be conscious of moving forward. 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.