Saint-Care Holding (TSE:2374) Is Increasing Its Dividend To ¥30.00

Saint-Care Holding Corporation's (TSE:2374) dividend will be increasing from last year's payment of the same period to ¥30.00 on 30th of June. This will take the annual payment to 3.9% of the stock price, which is above what most companies in the industry pay.

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Saint-Care Holding's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Saint-Care Holding's dividend was only 40% of earnings, however it was paying out 130% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Over the next year, EPS is forecast to expand by 7.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Saint-Care Holding

Saint-Care Holding Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥9.00, compared to the most recent full-year payment of ¥30.00. This means that it has been growing its distributions at 13% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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. Saint-Care Holding has seen EPS rising for the last five years, at 12% per annum. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On Saint-Care Holding's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Saint-Care Holding's payments are rock solid. While Saint-Care Holding is earning enough to cover the payments, the cash flows are lacking. We don't think Saint-Care Holding is a great stock to add to your portfolio if income is your focus.

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. For instance, we've picked out 2 warning signs for Saint-Care Holding that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.