CE HoldingsLtd (TSE:4320) Is Increasing Its Dividend To ¥15.00

CE Holdings Co.,Ltd. (TSE:4320) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of December to ¥15.00. This makes the dividend yield 3.2%, which is above the industry average.

Check out our latest analysis for CE HoldingsLtd

CE HoldingsLtd Might Find It Hard To Continue The Dividend

A big dividend yield for a few years doesn't mean much if it can't be sustained. Even in the absence of profits, CE HoldingsLtd is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

Looking forward, earnings per share could rise by 7.1% over the next year if the trend from the last few years continues. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. Unless this happens fairly soon, the dividend could start to come under pressure.

CE HoldingsLtd Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from ¥2.50 total annually to ¥15.00. This means that it has been growing its distributions at 20% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See CE HoldingsLtd's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. CE HoldingsLtd has seen EPS rising for the last five years, at 7.1% per annum. It's not an ideal situation that the company isn't turning a profit but the growth recently is a positive sign. If the company can become profitable soon, continuing on this trajectory would bode well for the future of the dividend.

CE HoldingsLtd's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think CE HoldingsLtd will make a great income stock. Although they have been consistent in the past, we think the payments are a little high to be sustained. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for CE HoldingsLtd (of which 1 is a bit concerning!) you should know about. Is CE HoldingsLtd 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.