Yamato Holdings' (TSE:9064) Dividend Will Be ¥23.00

Yamato Holdings Co., Ltd.'s (TSE:9064) investors are due to receive a payment of ¥23.00 per share on 2nd of June. This means that the annual payment will be 2.5% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Yamato Holdings

Yamato Holdings' Payment Could Potentially Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Yamato Holdings was paying out quite a large proportion of both earnings and cash flow, with the dividend being 522% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

The next year is set to see EPS grow by 26.8%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 64% which would be quite comfortable going to take the dividend forward.

Yamato Holdings Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of ¥24.00 in 2014 to the most recent total annual payment of ¥46.00. This means that it has been growing its distributions at 6.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Yamato Holdings Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Yamato Holdings has seen EPS rising for the last five years, at 15% per annum. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Yamato Holdings' payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Yamato Holdings that you should be aware of before investing. Is Yamato Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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