BuySell TechnologiesLtd (TSE:7685) Is Increasing Its Dividend To ¥30.00

BuySell Technologies Co.,Ltd. (TSE:7685) has announced that it will be increasing its dividend from last year's comparable payment on the 25th of March to ¥30.00. Based on this payment, the dividend yield for the company will be 1.1%, which is fairly typical for the industry.

See our latest analysis for BuySell TechnologiesLtd

BuySell TechnologiesLtd'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. BuySell TechnologiesLtd is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 27.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

BuySell TechnologiesLtd's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. The annual payment during the last 4 years was ¥12.00 in 2020, and the most recent fiscal year payment was ¥30.00. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. BuySell TechnologiesLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

BuySell TechnologiesLtd May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. BuySell TechnologiesLtd hasn't seen much change in its earnings per share over the last five years. While growth may be thin on the ground, BuySell TechnologiesLtd could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, we always like to see the dividend being raised, but we don't think BuySell TechnologiesLtd will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

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 instance, we've picked out 2 warning signs for BuySell TechnologiesLtd that investors should take into consideration. Is BuySell TechnologiesLtd 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.