Sumitomo Seika Chemicals Company (TSE:4008) Is Due To Pay A Dividend Of ¥100.00

Sumitomo Seika Chemicals Company, Limited. (TSE:4008) will pay a dividend of ¥100.00 on the 9th of June. This makes the dividend yield 4.4%, which will augment investor returns quite nicely.

Check out our latest analysis for Sumitomo Seika Chemicals Company

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

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Sumitomo Seika Chemicals Company's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 15.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.

Sumitomo Seika Chemicals Company 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 2015, the dividend has gone from ¥50.00 total annually to ¥200.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Sumitomo Seika Chemicals Company has seen EPS rising for the last five years, at 16% per annum. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Our Thoughts On Sumitomo Seika Chemicals Company's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Sumitomo Seika Chemicals Company's payments, as there could be some issues with sustaining them into the future. While Sumitomo Seika Chemicals Company is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Sumitomo Seika Chemicals Company that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.