AMBITION DX HOLDINGS' (TSE:3300) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of AMBITION DX HOLDINGS Co., Ltd. (TSE:3300) has announced that it will be paying its dividend of ¥105.00 on the 29th of September, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 2.7%.

Check out our latest analysis for AMBITION DX HOLDINGS

AMBITION DX HOLDINGS' Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. AMBITION DX HOLDINGS is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 43.6% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from ¥4.75 total annually to ¥55.00. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that AMBITION DX HOLDINGS has grown earnings per share at 44% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On AMBITION DX HOLDINGS' Dividend

Overall, we always like to see the dividend being raised, but we don't think AMBITION DX HOLDINGS will make a great income stock. While AMBITION DX HOLDINGS is earning enough to cover the payments, the cash flows are lacking. We don't think AMBITION DX HOLDINGS is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 4 warning signs for AMBITION DX HOLDINGS you should be aware of, and 1 of them shouldn't be ignored. Is AMBITION DX HOLDINGS 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.