Japan Aviation Electronics Industry (TSE:6807) Has Announced A Dividend Of ¥25.00

Japan Aviation Electronics Industry, Limited's (TSE:6807) investors are due to receive a payment of ¥25.00 per share on 3rd of June. The dividend yield will be 1.8% based on this payment which is still above the industry average.

View our latest analysis for Japan Aviation Electronics Industry

Japan Aviation Electronics Industry's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Japan Aviation Electronics Industry was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 41.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Japan Aviation Electronics Industry Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was ¥10.00 in 2014, and the most recent fiscal year payment was ¥50.00. This means that it has been growing its distributions at 17% 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.

Japan Aviation Electronics Industry May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though Japan Aviation Electronics Industry's EPS has declined at around 2.8% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Japan Aviation Electronics Industry's Dividend

Overall, a consistent dividend is a good thing, and we think that Japan Aviation Electronics Industry has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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 instance, we've picked out 1 warning sign for Japan Aviation Electronics Industry that investors should take into consideration. Is Japan Aviation Electronics Industry not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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