Kisoji's (TSE:8160) Dividend Will Be ¥12.00

The board of Kisoji Co., Ltd. (TSE:8160) has announced that it will pay a dividend of ¥12.00 per share on the 30th of June. This makes the dividend yield 1.1%, which is above the industry average.

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Kisoji's Projections Indicate Future Payments May Be Unsustainable

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 408% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

EPS is set to grow by 103.4% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 239%, which is a bit high and could start applying pressure to the balance sheet.

View our latest analysis for Kisoji

Kisoji Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was ¥15.00 in 2021, and the most recent fiscal year payment was ¥24.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth Could Be Constrained

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Kisoji has been growing its earnings per share at 103% a year over the past five years. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

Kisoji's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Kisoji will make a great income stock. Strong earnings growth means Kisoji has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. 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. For instance, we've picked out 2 warning signs for Kisoji that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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