TakashoLtd's (TSE:7590) Dividend Will Be ¥5.00

The board of Takasho Co.,Ltd. (TSE:7590) has announced that it will pay a dividend on the 11th of April, with investors receiving ¥5.00 per share. This payment means the dividend yield will be 1.0%, which is below the average for the industry.

Check out our latest analysis for TakashoLtd

TakashoLtd's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate TakashoLtd's Could Struggle to Maintain Dividend Payments In The Future

TakashoLtd's Future Dividends May Potentially Be At Risk

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Even though TakashoLtd isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

The next 12 months is set to see EPS grow by 103.2%. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from ¥19.00 total annually to ¥5.00. Dividend payments have fallen sharply, down 74% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth Potential Is Shaky

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. TakashoLtd's EPS has fallen by approximately 25% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

TakashoLtd's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think TakashoLtd 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for TakashoLtd that investors should take into consideration. Is TakashoLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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