TOKYO BASELtd (TSE:3415) Is Increasing Its Dividend To ¥5.00

TOKYO BASE Co.,Ltd.'s (TSE:3415) dividend will be increasing from last year's payment of the same period to ¥5.00 on 22nd of April. This takes the annual payment to 1.6% of the current stock price, which is about average for the industry.

See our latest analysis for TOKYO BASELtd

TOKYO BASELtd's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, TOKYO BASELtd's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 16.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

TOKYO BASELtd Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of ¥2.00 in 2021 to the most recent total annual payment of ¥5.00. This implies that the company grew its distributions at a yearly rate of about 36% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. It's not great to see that TOKYO BASELtd's earnings per share has fallen at approximately 6.5% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On TOKYO BASELtd's Dividend

In summary, while it's always good to see the dividend being raised, we don't think TOKYO BASELtd's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for TOKYO BASELtd that investors should take into consideration. Is TOKYO BASELtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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