Hisamitsu Pharmaceutical (TSE:4530) Has Announced A Dividend Of ¥45.00

The board of Hisamitsu Pharmaceutical Co., Inc. (TSE:4530) has announced that it will pay a dividend of ¥45.00 per share on the 26th of May. Based on this payment, the dividend yield for the company will be 2.0%, which is fairly typical for the industry.

View our latest analysis for Hisamitsu Pharmaceutical

Hisamitsu Pharmaceutical's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last dividend, Hisamitsu Pharmaceutical is earning enough to cover the payment, but then it makes up 3,584% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

The next year is set to see EPS grow by 14.0%. If the dividend continues on this path, the payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

Hisamitsu Pharmaceutical Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was ¥70.00 in 2014, and the most recent fiscal year payment was ¥86.00. This means that it has been growing its distributions at 2.1% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Hisamitsu Pharmaceutical May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Although it's important to note that Hisamitsu Pharmaceutical's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Hisamitsu Pharmaceutical will make a great income stock. While Hisamitsu Pharmaceutical is earning enough to cover the payments, the cash flows are lacking. We don't think Hisamitsu Pharmaceutical is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Hisamitsu Pharmaceutical that investors should know about before committing capital to this stock. Is Hisamitsu 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.