The board of artience Co., Ltd. (TSE:4634) has announced that it will pay a dividend of ¥45.00 per share on the 2nd of September. The dividend yield will be 2.7% based on this payment which is still above the industry average.
Check out our latest analysis for artience
artience's Payment Has Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, artience was paying only paying out a fraction of earnings, but the payment was a massive 137% 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.
Looking forward, earnings per share is forecast to rise by 34.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.
artience Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from ¥60.00 total annually to ¥90.00. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 4.0% per annum over the last five years, which admittedly is a bit slow. If artience is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On artience's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about artience's payments, as there could be some issues with sustaining them into the future. While artience is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for artience that you should be aware of before investing. 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.
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About TSE:4634
artience
Engages in the colorants and functional materials, polymers and coatings, printing and information, and packaging materials businesses in Japan, China, Europe, Africa, Asia, the Americas, and internationally.
Undervalued with solid track record and pays a dividend.
