Bookoff Group Holdings (TSE:9278) Is Due To Pay A Dividend Of ¥25.00

Bookoff Group Holdings Limited's (TSE:9278) investors are due to receive a payment of ¥25.00 per share on 28th of August. This payment means that the dividend yield will be 1.5%, which is around the industry average.

View our latest analysis for Bookoff Group Holdings

Bookoff Group Holdings' Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Bookoff Group Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

The next year is set to see EPS grow by 2.9%. If the dividend continues on this path, the payout ratio could be 17% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The last annual payment of ¥25.00 was flat on the annual payment from10 years ago. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Bookoff Group Holdings has only grown its earnings per share at 4.7% per annum over the past five years. While EPS growth is quite low, Bookoff Group Holdings has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Bookoff Group Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Bookoff Group Holdings' payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Bookoff Group Holdings is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Bookoff Group Holdings that investors should know about before committing capital to this stock. Is Bookoff Group Holdings 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.