Kissei Pharmaceutical (TSE:4547) Is Due To Pay A Dividend Of ¥41.00

Kissei Pharmaceutical Co., Ltd. (TSE:4547) has announced that it will pay a dividend of ¥41.00 per share on the 24th of June. This takes the annual payment to 2.3% of the current stock price, which is about average for the industry.

View our latest analysis for Kissei Pharmaceutical

Kissei Pharmaceutical's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Kissei Pharmaceutical's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 10.9% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 35%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Kissei Pharmaceutical Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥40.00 total annually to ¥82.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.4% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Kissei Pharmaceutical has seen EPS rising for the last five years, at 20% per annum. Kissei Pharmaceutical definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Kissei Pharmaceutical's Dividend

Overall, we always like to see the dividend being raised, but we don't think Kissei Pharmaceutical will make a great income stock. While Kissei Pharmaceutical is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Kissei Pharmaceutical (of which 1 makes us a bit uncomfortable!) you should know about. 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.