Airport Facilities (TSE:8864) Will Pay A Larger Dividend Than Last Year At ¥18.00

Airport Facilities Co., Ltd. (TSE:8864) will increase its dividend from last year's comparable payment on the 27th of November to ¥18.00. This will take the dividend yield to an attractive 3.6%, providing a nice boost to shareholder returns.

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Airport Facilities' Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Airport Facilities was paying a whopping 138% as a dividend, but this only made up 32% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, earnings per share is forecast to rise by 6.8% over the next year. 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.

Check out our latest analysis for Airport Facilities

Airport Facilities Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ¥12.00 total annually to ¥37.00. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Airport Facilities Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Airport Facilities has seen EPS rising for the last five years, at 8.5% per annum. Airport Facilities definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Airport Facilities' Dividend

Overall, we always like to see the dividend being raised, but we don't think Airport Facilities 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 don't think Airport Facilities 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Airport Facilities that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.