Kotobuki Spirits (TSE:2222) Will Pay A Dividend Of ¥28.00

Kotobuki Spirits Co., Ltd. (TSE:2222) has announced that it will pay a dividend of ¥28.00 per share on the 26th of June. This means the annual payment will be 1.2% of the current stock price, which is lower than the industry average.

See our latest analysis for Kotobuki Spirits

Kotobuki Spirits' Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Kotobuki Spirits' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 15.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 38%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from ¥2.67 total annually to ¥28.00. This implies that the company grew its distributions at a yearly rate of about 27% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Kotobuki Spirits has seen EPS rising for the last five years, at 19% per annum. Kotobuki Spirits definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Kotobuki Spirits Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Kotobuki Spirits might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Kotobuki Spirits analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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