YAKUODO HOLDINGS (TSE:7679) Has Announced That It Will Be Increasing Its Dividend To ¥27.00

YAKUODO HOLDINGS Co., Ltd.'s (TSE:7679) dividend will be increasing from last year's payment of the same period to ¥27.00 on 26th of May. Based on this payment, the dividend yield for the company will be 1.4%, which is fairly typical for the industry.

See our latest analysis for YAKUODO HOLDINGS

YAKUODO HOLDINGS' Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, YAKUODO HOLDINGS was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 6.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 13%, which is in the range that makes us comfortable with the sustainability of the dividend.

YAKUODO HOLDINGS Is Still Building Its Track Record

It is great to see that YAKUODO HOLDINGS 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. The annual payment during the last 7 years was ¥21.00 in 2018, and the most recent fiscal year payment was ¥27.00. This means that it has been growing its distributions at 3.7% per annum over that time. YAKUODO HOLDINGS hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. YAKUODO HOLDINGS has impressed us by growing EPS at 6.0% per year over the past five years. 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 YAKUODO HOLDINGS' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. See if management have their own wealth at stake, by checking insider shareholdings in YAKUODO HOLDINGS stock. 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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