Keihanshin Building (TSE:8818) Has Announced A Dividend Of ¥20.00

The board of Keihanshin Building Co., Ltd. (TSE:8818) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥20.00 per share. The payment will take the dividend yield to 2.3%, which is in line with the average for the industry.

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Keihanshin Building's Future Dividend Projections Appear Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Keihanshin Building was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 4.0%. If the dividend continues on this path, the payout ratio could be 49% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Keihanshin Building

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the annual payment back then was ¥16.00, compared to the most recent full-year payment of ¥40.00. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Keihanshin Building might have put its house in order since then, but we remain cautious.

Keihanshin Building May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Keihanshin Building hasn't seen much change in its earnings per share over the last five years. Keihanshin Building is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Keihanshin Building has 3 warning signs (and 1 which is potentially serious) we think you should know about. Is Keihanshin Building not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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