RIDE ON EXPRESS HOLDINGS (TSE:6082) Is Paying Out A Dividend Of ¥15.00

RIDE ON EXPRESS HOLDINGS Co., Ltd. (TSE:6082) has announced that it will pay a dividend of ¥15.00 per share on the 27th of June. This means the annual payment is 1.5% of the current stock price, which is above the average for the industry.

View our latest analysis for RIDE ON EXPRESS HOLDINGS

RIDE ON EXPRESS HOLDINGS' Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by RIDE ON EXPRESS HOLDINGS' earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 19.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 57% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was ¥10.00, compared to the most recent full-year payment of ¥15.00. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. 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.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Earnings per share has been sinking by 20% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about RIDE ON EXPRESS HOLDINGS' payments, as there could be some issues with sustaining them into the future. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for RIDE ON EXPRESS HOLDINGS 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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