eXmotion (TSE:4394) Is Paying Out A Larger Dividend Than Last Year

eXmotion Co., Ltd.'s (TSE:4394) dividend will be increasing from last year's payment of the same period to ¥20.00 on 2nd of March. This makes the dividend yield 2.5%, which is above the industry average.

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eXmotion's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by eXmotion's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 85.9% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for eXmotion

eXmotion Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2023, the dividend has gone from ¥17.00 total annually to ¥20.00. This means that it has been growing its distributions at 8.5% per annum over that time. eXmotion has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that eXmotion has been growing its earnings per share at 86% a year over the past five years. eXmotion is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like eXmotion's Dividend

Overall, a dividend increase is always good, and we think that eXmotion is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for eXmotion that investors should know about before committing capital to this stock. Is eXmotion 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.