TSUKADA GLOBAL HOLDINGS (TSE:2418) Will Pay A Dividend Of ¥5.00

TSUKADA GLOBAL HOLDINGS Inc.'s (TSE:2418) investors are due to receive a payment of ¥5.00 per share on 31st of March. Based on this payment, the dividend yield will be 2.5%, which is fairly typical for the industry.

View our latest analysis for TSUKADA GLOBAL HOLDINGS

TSUKADA GLOBAL HOLDINGS' Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, TSUKADA GLOBAL HOLDINGS' dividend was only 4.2% of earnings, however it was paying out 712% of free cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Looking forward, earnings per share could rise by 13.0% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 7.2% by next year, which we think can be pretty sustainable going forward.

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 most recent annual payment of ¥10.00 is about the same as the annual payment 10 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

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 TSUKADA GLOBAL HOLDINGS has grown earnings per share at 13% 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 TSUKADA GLOBAL HOLDINGS' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about TSUKADA GLOBAL HOLDINGS' payments, as there could be some issues with sustaining them into the future. While TSUKADA GLOBAL HOLDINGS is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for TSUKADA GLOBAL HOLDINGS (1 is potentially serious!) 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.