J. Front Retailing's (TSE:3086) Dividend Will Be ¥27.00

J. Front Retailing Co., Ltd. (TSE:3086) has announced that it will pay a dividend of ¥27.00 per share on the 12th of November. This makes the dividend yield 2.6%, which is above the industry average.

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J. Front Retailing's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, J. Front Retailing's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 0.8% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 36%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for J. Front Retailing

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ¥24.00 in 2015, and the most recent fiscal year payment was ¥54.00. This means that it has been growing its distributions at 8.4% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

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. J. Front Retailing has impressed us by growing EPS at 15% per year over the past five years. J. Front Retailing definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

J. Front Retailing Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that J. Front Retailing is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, J. Front Retailing has 2 warning signs (and 1 which is potentially serious) we think you should know about. Is J. Front Retailing not quite the opportunity you were looking for? Why not check out our selection of top 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.