Kitanotatsujin (TSE:2930) Is Due To Pay A Dividend Of ¥1.20

The board of Kitanotatsujin Corporation (TSE:2930) has announced that it will pay a dividend of ¥1.20 per share on the 11th of November. Although the dividend is now higher, the yield is only 1.3%, which is below the industry average.

View our latest analysis for Kitanotatsujin

Kitanotatsujin's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Kitanotatsujin was paying only paying out a fraction of earnings, but the payment was a massive 106% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 2.6%. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

Kitanotatsujin's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2019, the dividend has gone from ¥4.10 total annually to ¥2.30. Dividend payments have fallen sharply, down 44% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Kitanotatsujin May Find It Hard To Grow The Dividend

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Kitanotatsujin hasn't seen much change in its earnings per share over the last five years.

Kitanotatsujin's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Kitanotatsujin will make a great income stock. While Kitanotatsujin is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

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. Now, if you want to look closer, it would be worth checking out our free research on Kitanotatsujin management tenure, salary, and performance. 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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