Sumitomo Seika Chemicals Company (TSE:4008) Has Affirmed Its Dividend Of ¥100.00

The board of Sumitomo Seika Chemicals Company, Limited. (TSE:4008) has announced that it will pay a dividend of ¥100.00 per share on the 3rd of June. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.

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Sumitomo Seika Chemicals Company's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Sumitomo Seika Chemicals Company's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.

Looking forward, EPS could fall by 0.2% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 50%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Check out our latest analysis for Sumitomo Seika Chemicals Company

Sumitomo Seika Chemicals Company Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of ¥75.00 in 2015 to the most recent total annual payment of ¥200.00. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Sumitomo Seika Chemicals Company May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. Unfortunately, Sumitomo Seika Chemicals Company's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Sumitomo Seika Chemicals Company's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Sumitomo Seika Chemicals Company is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

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 identified 3 warning signs for Sumitomo Seika Chemicals Company (1 is a bit unpleasant!) that you should be aware of before investing. 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.