Paramount Bed Holdings (TSE:7817) Has Announced That It Will Be Increasing Its Dividend To ¥62.00

Paramount Bed Holdings Co., Ltd. (TSE:7817) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of December to ¥62.00. This takes the dividend yield to 4.7%, which shareholders will be pleased with.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Paramount Bed Holdings' 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, Paramount Bed Holdings' dividend was only 64% of earnings, however it was paying out 117% 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.

The next year is set to see EPS grow by 11.1%. If the dividend continues on this path, the payout ratio could be 71% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Paramount Bed Holdings

Paramount Bed Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ¥25.00 total annually to ¥125.00. This means that it has been growing its distributions at 17% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Paramount Bed Holdings' 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. We are encouraged to see that Paramount Bed Holdings has grown earnings per share at 5.8% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Paramount Bed Holdings will make a great income stock. While Paramount Bed Holdings is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Paramount Bed Holdings that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.