JCR Pharmaceuticals (TSE:4552) Is Due To Pay A Dividend Of ¥10.00

JCR Pharmaceuticals Co., Ltd. (TSE:4552) will pay a dividend of ¥10.00 on the 24th of June. This means that the annual payment will be 2.3% of the current stock price, which is in line with the average for the industry.

See our latest analysis for JCR Pharmaceuticals

JCR Pharmaceuticals' Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, JCR Pharmaceuticals' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

EPS is set to fall by 28.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could reach 78%, which is definitely on the higher side.

JCR Pharmaceuticals Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from ¥3.50 total annually to ¥20.00. This means that it has been growing its distributions at 19% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that JCR Pharmaceuticals has grown earnings per share at 17% per year over the past five years. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Our Thoughts On JCR Pharmaceuticals' Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, JCR Pharmaceuticals has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is JCR Pharmaceuticals 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.