Kasumigaseki CapitalLtd (TSE:3498) Will Pay A Larger Dividend Than Last Year At ¥240.00

Kasumigaseki Capital Co.,Ltd.'s (TSE:3498) dividend will be increasing from last year's payment of the same period to ¥240.00 on 1st of December. This makes the dividend yield about the same as the industry average at 2.0%.

We've discovered 4 warning signs about Kasumigaseki CapitalLtd. View them for free.

Kasumigaseki CapitalLtd's Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Kasumigaseki CapitalLtd'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.

Over the next year, EPS is forecast to expand by 34.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Kasumigaseki CapitalLtd

Kasumigaseki CapitalLtd Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2020, the annual payment back then was ¥10.00, compared to the most recent full-year payment of ¥240.00. This works out to be a compound annual growth rate (CAGR) of approximately 89% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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. It's encouraging to see that Kasumigaseki CapitalLtd has been growing its earnings per share at 96% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Kasumigaseki CapitalLtd's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for Kasumigaseki CapitalLtd (of which 2 are significant!) 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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