Kaken Pharmaceutical (TSE:4521) Is Due To Pay A Dividend Of ¥75.00

Kaken Pharmaceutical Co., Ltd. (TSE:4521) will pay a dividend of ¥75.00 on the 30th of June. This means the annual payment is 3.3% of the current stock price, which is above the average for the industry.

Kaken Pharmaceutical's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Kaken Pharmaceutical's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to fall by 56.8% over the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 84% in the next 12 months, which is on the higher end of the range we would say is sustainable.

View our latest analysis for Kaken Pharmaceutical

Kaken Pharmaceutical Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of ¥108.00 in 2015 to the most recent total annual payment of ¥150.00. This works out to be a compound annual growth rate (CAGR) of approximately 3.3% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 2.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Kaken Pharmaceutical has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Kaken Pharmaceutical's Dividend

Overall, we like to see the dividend staying consistent, and we think Kaken Pharmaceutical might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Kaken Pharmaceutical that investors need to be conscious of moving forward. Is Kaken Pharmaceutical 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.