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 makes the dividend yield 4.0%, which is above the industry average.

View our latest analysis for Takachiho KohekiLtd

Takachiho KohekiLtd Doesn't Earn Enough To Cover Its Payments

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, the company's dividend was higher than its profits, and made up 94% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

Over the next year, EPS could expand by 18.6% if the company continues along the path it has been on recently. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 100% over the next year.

Takachiho KohekiLtd Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥24.00 in 2014 to the most recent total annual payment of ¥160.00. This means that it has been growing its distributions at 21% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Takachiho KohekiLtd's Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. Takachiho KohekiLtd has seen EPS rising for the last five years, at 19% per annum. Although per-share earnings are growing at a credible rate, the massive payout ratio may limit growth in the company's future dividend payments.

In Summary

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. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Takachiho KohekiLtd that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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