Fuso Pharmaceutical IndustriesLtd's (TSE:4538) Dividend Will Be ¥45.00

The board of Fuso Pharmaceutical Industries,Ltd. (TSE:4538) has announced that it will pay a dividend on the 26th of June, with investors receiving ¥45.00 per share. This makes the dividend yield 4.2%, which is above the industry average.

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Fuso Pharmaceutical IndustriesLtd's Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Fuso Pharmaceutical IndustriesLtd's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 8.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Fuso Pharmaceutical IndustriesLtd

Fuso Pharmaceutical IndustriesLtd Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of ¥80.00 in 2023 to the most recent total annual payment of ¥90.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% a year over that time. Fuso Pharmaceutical IndustriesLtd has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

Fuso Pharmaceutical IndustriesLtd Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Fuso Pharmaceutical IndustriesLtd has grown earnings per share at 8.7% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Fuso Pharmaceutical IndustriesLtd Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Fuso Pharmaceutical IndustriesLtd that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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