The board of Bull-Dog Sauce Co., Ltd. (TSE:2804) has announced that it will pay a dividend of ¥18.00 per share on the 27th of June. This means the dividend yield will be fairly typical at 2.0%.
View our latest analysis for Bull-Dog Sauce
Estimates Indicate Bull-Dog Sauce's Could Struggle to Maintain Dividend Payments In The Future
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Bull-Dog Sauce's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.
EPS is set to fall by 15.1% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 217%, which could put the dividend in jeopardy if the company's earnings don't improve.
Bull-Dog Sauce Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥17.50 in 2015, and the most recent fiscal year payment was ¥35.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Dividend Growth Potential Is Shaky
The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 15% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.
Our Thoughts On Bull-Dog Sauce's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Bull-Dog Sauce's payments, as there could be some issues with sustaining them into the future. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Bull-Dog Sauce has 3 warning signs (and 1 which is significant) we think you should know about. Is Bull-Dog Sauce 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:2804
Bull-Dog Sauce
Manufactures and sells brown sauces and other seasonings in Japan.
Adequate balance sheet average dividend payer.