RACCOON HOLDINGS (TSE:3031) Has Announced A Dividend Of ¥11.00

The board of RACCOON HOLDINGS, Inc. (TSE:3031) has announced that it will pay a dividend on the 14th of January, with investors receiving ¥11.00 per share. This will take the annual payment to 3.0% of the stock price, which is above what most companies in the industry pay.

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RACCOON HOLDINGS' Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, RACCOON HOLDINGS was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. The business is earning enough to make the dividend feasible, but the cash payout ratio of 94% indicates it is more focused on returning cash to shareholders than growing the business.

Looking forward, earnings per share is forecast to rise by 16.6% over the next year. If the dividend continues on this path, the payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for RACCOON HOLDINGS

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. The dividend has gone from an annual total of ¥2.27 in 2015 to the most recent total annual payment of ¥22.00. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

We Could See RACCOON HOLDINGS' Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. RACCOON HOLDINGS has impressed us by growing EPS at 6.6% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Our Thoughts On RACCOON HOLDINGS' Dividend

Overall, we always like to see the dividend being raised, but we don't think RACCOON HOLDINGS will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments RACCOON HOLDINGS has been making. We don't think RACCOON HOLDINGS is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for RACCOON HOLDINGS (1 can't be ignored!) that you should be aware of before investing. 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.