Enjin (TSE:7370) Will Pay A Dividend Of ¥20.00

The board of Enjin Co., Ltd. (TSE:7370) has announced that it will pay a dividend on the 30th of January, with investors receiving ¥20.00 per share. This will take the dividend yield to an attractive 4.4%, providing a nice boost to shareholder returns.

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Enjin's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Enjin's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 36.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 66% by next year, which is in a pretty sustainable range.

See our latest analysis for Enjin

Enjin's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2022, the annual payment back then was ¥26.00, compared to the most recent full-year payment of ¥38.00. This means that it has been growing its distributions at 13% per annum over that time. Enjin has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Dividend Growth Is Doubtful

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's not great to see that Enjin's earnings per share has fallen at approximately 6.2% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On Enjin's Dividend

Overall, we always like to see the dividend being raised, but we don't think Enjin will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 3 warning signs for Enjin that investors should take into consideration. Is Enjin 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.