Fujimi (TSE:5384) Will Pay A Dividend Of ¥36.67

Fujimi Incorporated's (TSE:5384) investors are due to receive a payment of ¥36.67 per share on 24th of June. The dividend yield will be 3.1% based on this payment which is still above the industry average.

View our latest analysis for Fujimi

Fujimi's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. At the time of the last dividend payment, Fujimi was paying out a very large proportion of what it was earning and 137% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.

EPS is set to grow by 12.3% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 77% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ¥10.00 in 2014, and the most recent fiscal year payment was ¥73.34. This means that it has been growing its distributions at 22% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fujimi has seen EPS rising for the last five years, at 13% per annum. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Fujimi is earning enough to cover the payments, the cash flows are lacking. We don't think Fujimi is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Fujimi that you should be aware of before investing. Is Fujimi not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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