Tokyo Tatemono (TSE:8804) Is Increasing Its Dividend To ¥43.00

Tokyo Tatemono Co., Ltd. (TSE:8804) has announced that it will be increasing its dividend from last year's comparable payment on the 28th of March to ¥43.00. This makes the dividend yield 3.3%, which is above the industry average.

See our latest analysis for Tokyo Tatemono

Tokyo Tatemono'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. Tokyo Tatemono 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.

The next year is set to see EPS grow by 3.3%. If the dividend continues on this path, the payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.

Tokyo Tatemono Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥12.00, compared to the most recent full-year payment of ¥86.00. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Tokyo Tatemono has impressed us by growing EPS at 13% per year over the past five years. Tokyo Tatemono definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Tokyo Tatemono's Dividend

Overall, we always like to see the dividend being raised, but we don't think Tokyo Tatemono will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Tokyo Tatemono has 2 warning signs (and 1 which can't be ignored) we think 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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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.