JCR Pharmaceuticals (TSE:4552) Will Pay A Dividend Of ¥10.00

JCR Pharmaceuticals Co., Ltd.'s (TSE:4552) investors are due to receive a payment of ¥10.00 per share on 27th of June. This makes the dividend yield 3.3%, which will augment investor returns quite nicely.

See our latest analysis for JCR Pharmaceuticals

JCR Pharmaceuticals' Distributions May Be Difficult To Sustain

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. JCR Pharmaceuticals is unprofitable despite paying a dividend, and it is paying out 563% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

Analysts expect the EPS to grow by 27.8% over the next 12 months. The company seems to be going down the right path, but it will take a little bit longer than a year to cross over into profitability. Unless this happens fairly soon, the dividend could start to come under pressure.

JCR Pharmaceuticals Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥3.50, compared to the most recent full-year payment of ¥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's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. However, JCR Pharmaceuticals' EPS was effectively flat over the past five years, which could stop the company from paying more every year.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, JCR Pharmaceuticals has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.