Air Water (TSE:4088) Is Due To Pay A Dividend Of ¥32.00

The board of Air Water Inc. (TSE:4088) has announced that it will pay a dividend of ¥32.00 per share on the 27th of June. The dividend yield of 3.5% is still a nice boost to shareholder returns, despite the cut.

Check out our latest analysis for Air Water

Air Water's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Air Water's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 8.7%. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Air Water Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was ¥26.00, compared to the most recent full-year payment of ¥64.00. This means that it has been growing its distributions at 9.4% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

We Could See Air Water's 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. Air Water has impressed us by growing EPS at 8.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Air Water's prospects of growing its dividend payments in the future.

We Really Like Air Water's Dividend

Overall, we think that Air Water could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Air Water that investors need to be conscious of moving forward. Is Air Water not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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.