St.Cousair (TSE:2937) Has Announced A Dividend Of ¥35.00

St.Cousair Co., Ltd.'s (TSE:2937) investors are due to receive a payment of ¥35.00 per share on 24th of June. Based on this payment, the dividend yield on the company's stock will be 2.2%, which is an attractive boost to shareholder returns.

View our latest analysis for St.Cousair

St.Cousair's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, St.Cousair's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 112% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.

EPS is set to grow by 3.9% over the next year if recent trends continue. If recent patterns in the dividend continue, the payout ratio in 12 months could be 79% which is a bit high but can definitely be sustainable.

St.Cousair 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 2 years, which isn't that long in the grand scheme of things. Since 2023, the dividend has gone from ¥33.00 total annually to ¥35.00. This means that it has been growing its distributions at 3.0% per annum over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, St.Cousair has only grown its earnings per share at 3.9% per annum over the past five years. Slow growth and a high payout ratio could mean that St.Cousair has maxed out the amount that it has been able to pay to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

St.Cousair's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 5 warning signs for St.Cousair (1 shouldn't be ignored!) that you should be aware of before investing. Is St.Cousair not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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