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

Hisamitsu Pharmaceutical Co., Inc. (TSE:4530) will pay a dividend of ¥45.00 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.

Check out our latest analysis for Hisamitsu Pharmaceutical

Hisamitsu Pharmaceutical's Payment Could Potentially Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Hisamitsu Pharmaceutical's dividend was only 66% of earnings, however it was paying out 3,584% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that 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 is forecast to rise by 14.0% over the next year. 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 an extended history of paying stable dividends. The dividend has gone from an annual total of ¥70.00 in 2014 to the most recent total annual payment of ¥86.00. This implies that the company grew its distributions at a yearly rate of about 2.1% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Unfortunately, Hisamitsu Pharmaceutical's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Hisamitsu Pharmaceutical's Dividend

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. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Hisamitsu Pharmaceutical that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.