Yamaichi Uniheim Real EstateLtd (TSE:2984) Is Reducing Its Dividend To ¥30.00

Yamaichi Uniheim Real Estate Co.,Ltd (TSE:2984) has announced that on 27th of June, it will be paying a dividend of¥30.00, which a reduction from last year's comparable dividend. The yield is still above the industry average at 3.8%.

Check out our latest analysis for Yamaichi Uniheim Real EstateLtd

Yamaichi Uniheim Real EstateLtd'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. Before making this announcement, Yamaichi Uniheim Real EstateLtd was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 6.8% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 24%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Yamaichi Uniheim Real EstateLtd 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 most recent annual payment of ¥30.00 is about the same as the annual payment 2 years ago. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. In the last five years, Yamaichi Uniheim Real EstateLtd's earnings per share has shrunk at approximately 6.8% per annum. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

We should note that Yamaichi Uniheim Real EstateLtd has issued stock equal to 19% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

In Summary

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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, Yamaichi Uniheim Real EstateLtd has 4 warning signs (and 2 which can't be ignored) we think you should know about. Is Yamaichi Uniheim Real EstateLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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