Avex's (TSE:7860) Dividend Will Be ¥25.00

Avex Inc. (TSE:7860) will pay a dividend of ¥25.00 on the 9th of June. This makes the dividend yield 3.3%, which will augment investor returns quite nicely.

View our latest analysis for Avex

Avex's Future Dividends May Potentially Be At Risk

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, the dividend made up 2,095% of earnings, and the company was generating negative free cash flows. This high of a dividend payment could start to put pressure on the balance sheet in the future.

EPS is set to fall by 0.2% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 1,355%, which could put the dividend under pressure if earnings don't start to improve.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the annual payment back then was ¥60.00, compared to the most recent full-year payment of ¥50.00. Doing the maths, this is a decline of about 1.8% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Unfortunately, Avex's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

We're Not Big Fans Of Avex's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Avex make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Overall, this doesn't get us very excited from an income standpoint.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Avex has 3 warning signs (and 2 which are a bit concerning) we think you should know about. Is Avex not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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