Yamada Holdings Co., Ltd. (TSE:9831) will pay a dividend of ¥13.00 on the 30th of June. This makes the dividend yield 2.9%, which will augment investor returns quite nicely.
View our latest analysis for Yamada Holdings
Yamada Holdings' Future Dividend Projections Appear Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Yamada Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 10.1% over the next year. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the annual payment back then was ¥6.00, compared to the most recent full-year payment of ¥13.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.0% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.
The Dividend's Growth Prospects Are Limited
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Yamada Holdings' EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Yamada Holdings has the option to increase the payout ratio to return more cash to shareholders.
Our Thoughts On Yamada Holdings' Dividend
Overall, a consistent dividend is a good thing, and we think that Yamada Holdings has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
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. To that end, Yamada Holdings has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Yamada 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.
About TSE:9831
Yamada Holdings
Operates in the consumer electronics retailing activities in Japan and internationally.
Undervalued with mediocre balance sheet.
