Kohsoku (TSE:7504) Has Announced A Dividend Of ¥58.00

Kohsoku Corporation (TSE:7504) has announced that it will pay a dividend of ¥58.00 per share on the 26th of June. Even though the dividend went up, the yield is still quite low at only 1.9%.

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Kohsoku's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, Kohsoku was paying only paying out a fraction of earnings, but the payment was a massive 1,888% 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 could rise by 9.4% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 63% by next year, which is in a pretty sustainable range.

See our latest analysis for Kohsoku

Kohsoku Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥22.00 in 2015, and the most recent fiscal year payment was ¥56.00. This means that it has been growing its distributions at 9.8% 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.

Kohsoku Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Kohsoku has been growing its earnings per share at 9.4% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Kohsoku's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Kohsoku's payments are rock solid. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Kohsoku that investors should take into consideration. Is Kohsoku not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.