The board of JACCS Co., Ltd. (TSE:8584) has announced that it will pay a dividend on the 30th of June, with investors receiving ¥90.00 per share. This means the annual payment is 4.8% of the current stock price, which is above the average for the industry.
See our latest analysis for JACCS
JACCS' Payment Could Potentially Have Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. JACCS is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
EPS is set to fall by 5.0% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 32%, which is comfortable for the company to continue in the future.
JACCS Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥60.00, compared to the most recent full-year payment of ¥180.00. This means that it has been growing its distributions at 12% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that JACCS has been growing its earnings per share at 17% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for JACCS' prospects of growing its dividend payments in the future.
Our Thoughts On JACCS' Dividend
Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While JACCS is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for JACCS you should be aware of, and 2 of them are concerning. Is JACCS 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.
About TSE:8584
JACCS
Operates as a consumer finance company in Japan and internationally.
Undervalued established dividend payer.
