Sumitomo Seika Chemicals Company (TSE:4008) Will Pay A Dividend Of ¥100.00

The board of Sumitomo Seika Chemicals Company, Limited. (TSE:4008) has announced that it will pay a dividend on the 9th of June, with investors receiving ¥100.00 per share. This makes the dividend yield 4.0%, 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

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Sumitomo Seika Chemicals Company's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS could expand by 11.6% if recent trends continue. If the dividend continues on this path, the payout ratio could be 29% 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 annual payment back then was ¥75.00, compared to the most recent full-year payment of ¥200.00. This means that it has been growing its distributions at 10% per annum 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.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Sumitomo Seika Chemicals Company has grown earnings per share at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Sumitomo Seika Chemicals Company's prospects of growing its dividend payments in the future.

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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Sumitomo Seika Chemicals Company that investors should know about before committing capital to this stock. 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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