YAKUODO HOLDINGS (TSE:7679) Will Pay A Larger Dividend Than Last Year At ¥29.00

YAKUODO HOLDINGS Co., Ltd. (TSE:7679) will increase its dividend from last year's comparable payment on the 28th of May to ¥29.00. This takes the annual payment to 1.4% of the current stock price, which is about average for the industry.

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YAKUODO HOLDINGS' Projected Earnings Seem Likely To Cover Future Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, YAKUODO HOLDINGS was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS could expand by 3.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 13% by next year, which is in a pretty sustainable range.

Check out our latest analysis for YAKUODO HOLDINGS

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 ¥29.00. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

YAKUODO HOLDINGS May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 3.8% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, YAKUODO HOLDINGS could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On YAKUODO HOLDINGS' Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on YAKUODO HOLDINGS management tenure, salary, and performance. 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.