Tokyo Printing Ink Mfg (TSE:4635) Is Due To Pay A Dividend Of ¥100.00

Tokyo Printing Ink Mfg. Co., Ltd. (TSE:4635) will pay a dividend of ¥100.00 on the 3rd of December. This makes the dividend yield 5.0%, which is above the industry average.

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Tokyo Printing Ink Mfg's Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Tokyo Printing Ink Mfg's dividend was only 29% of earnings, however it was paying out 427% of free 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.

Over the next year, EPS could expand by 13.6% if recent trends continue. If the dividend continues on this path, the payout ratio could be 46% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Tokyo Printing Ink Mfg

Tokyo Printing Ink Mfg 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. The dividend has gone from an annual total of ¥60.00 in 2015 to the most recent total annual payment of ¥210.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Tokyo Printing Ink Mfg has seen EPS rising for the last five years, at 14% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Tokyo Printing Ink Mfg's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Tokyo Printing Ink Mfg's payments are rock solid. While Tokyo Printing Ink Mfg is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Tokyo Printing Ink Mfg that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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