Tokyo Individualized Educational Institute (TSE:4745) Is Due To Pay A Dividend Of ¥6.00

The board of Tokyo Individualized Educational Institute, Inc. (TSE:4745) has announced that it will pay a dividend on the 17th of November, with investors receiving ¥6.00 per share. Based on this payment, the dividend yield on the company's stock will be 3.5%, which is an attractive boost to shareholder returns.

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Tokyo Individualized Educational Institute's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Tokyo Individualized Educational Institute's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 2.4% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 51%, which is comfortable for the company to continue in the future.

View our latest analysis for Tokyo Individualized Educational Institute

Tokyo Individualized Educational Institute's Dividend Has Lacked Consistency

It's comforting to see that Tokyo Individualized Educational Institute has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2020, the dividend has gone from ¥26.00 total annually to ¥12.00. The dividend has fallen 54% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Tokyo Individualized Educational Institute's earnings per share has shrunk at 10% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Our Thoughts On Tokyo Individualized Educational Institute's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Tokyo Individualized Educational Institute has 2 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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