Tokyo Century (TSE:8439) Is Due To Pay A Dividend Of ¥29.00

Tokyo Century Corporation (TSE:8439) will pay a dividend of ¥29.00 on the 25th of June. This makes the dividend yield 3.8%, which is above the industry average.

Tokyo Century's Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Tokyo Century is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

The next year is set to see EPS grow by 6.1%. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Tokyo Century

Tokyo Century Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was ¥14.00, compared to the most recent full-year payment of ¥58.00. This means that it has been growing its distributions at 15% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Tokyo Century's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Tokyo Century has impressed us by growing EPS at 7.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Tokyo Century's prospects of growing its dividend payments in the future.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Tokyo Century's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Tokyo Century is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Tokyo Century (1 is significant!) that you should be aware of before investing. Is Tokyo Century not quite the opportunity you were looking for? Why not check out our selection of top 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.