Takachiho KohekiLtd (TSE:2676) Is Due To Pay A Dividend Of ¥58.00

The board of Takachiho Koheki Co.,Ltd. (TSE:2676) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥58.00 per share. This will take the annual payment to 4.0% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Takachiho KohekiLtd

Takachiho KohekiLtd Is Paying Out More Than It Is Earning

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the dividend made up 94% of cash flows, but a higher proportion of net income. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.

Earnings per share could rise by 24.2% over the next year if things go the same way as they have for the last few years. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 98% over the next year.

Takachiho KohekiLtd Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from ¥24.00 total annually to ¥160.00. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth Could Be Constrained

The company's investors will be pleased to have been receiving dividend income for some time. Takachiho KohekiLtd has impressed us by growing EPS at 24% per year over the past five years. EPS has been growing well, but Takachiho KohekiLtd has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

Our Thoughts On Takachiho KohekiLtd's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Takachiho KohekiLtd's payments are rock solid. Although they have been consistent in the past, we think the payments are a little high to be sustained. We don't think Takachiho KohekiLtd 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Takachiho KohekiLtd that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.

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