Japan Medical Dynamic Marketing's (TSE:7600) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Japan Medical Dynamic Marketing, INC. (TSE:7600) has announced that it will be paying its dividend of ¥15.00 on the 24th of June, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 2.4%, which is in line with the average for the industry.

See our latest analysis for Japan Medical Dynamic Marketing

Japan Medical Dynamic Marketing's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Japan Medical Dynamic Marketing was paying a whopping 131% as a dividend, but this only made up 26% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to expand by 15.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

Japan Medical Dynamic Marketing Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥5.00 in 2014, and the most recent fiscal year payment was ¥15.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Japan Medical Dynamic Marketing has seen earnings per share falling at 9.4% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On Japan Medical Dynamic Marketing's Dividend

Overall, we always like to see the dividend being raised, but we don't think Japan Medical Dynamic Marketing will make a great income stock. While Japan Medical Dynamic Marketing is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Japan Medical Dynamic Marketing that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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