Kisoji (TSE:8160) Will Pay A Dividend Of ¥12.00

The board of Kisoji Co., Ltd. (TSE:8160) has announced that it will pay a dividend on the 30th of June, with investors receiving ¥12.00 per share. This takes the dividend yield to 1.1%, which shareholders will be pleased with.

See our latest analysis for Kisoji

Kisoji's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate Kisoji's Could Struggle to Maintain Dividend Payments In The Future

Kisoji's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Kisoji is unprofitable despite paying a dividend, and it is paying out 119% of its free cash flow. This makes us feel that the dividend will be hard to maintain.

Earnings per share could rise by 109.2% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, we think the payout ratio could reach 20,891%, which probably can't continue without starting to put some pressure on the balance sheet.

Kisoji Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2020, the annual payment back then was ¥15.00, compared to the most recent full-year payment of ¥24.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Company Could Face Some Challenges Growing The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Kisoji has seen EPS rising for the last five years, at 109% per annum. While the company is not yet turning a profit, it is growing at a good rate. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

The Dividend Could Prove To Be Unreliable

In summary, while it's always good to see the dividend being raised, we don't think Kisoji's payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Kisoji management tenure, salary, and performance. Is Kisoji not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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