TOKYO BASELtd (TSE:3415) Is Paying Out A Larger Dividend Than Last Year

TOKYO BASE Co.,Ltd. (TSE:3415) has announced that it will be increasing its dividend from last year's comparable payment on the 24th of April to ¥6.00. The payment will take the dividend yield to 1.3%, which is in line with the average for the industry.

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TOKYO BASELtd's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, TOKYO BASELtd 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 returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.

Over the next year, EPS is forecast to expand by 13.7%. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for TOKYO BASELtd

TOKYO BASELtd Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2021, the dividend has gone from ¥2.00 total annually to ¥6.00. This means that it has been growing its distributions at 32% per annum over that time. 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 May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.9% per annum over the last five years, which admittedly is a bit slow. If TOKYO BASELtd is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On TOKYO BASELtd's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for TOKYO BASELtd that you should be aware of before investing. 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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