SENKO Group Holdings (TSE:9069) Is Increasing Its Dividend To ¥21.00

SENKO Group Holdings Co., Ltd.'s (TSE:9069) dividend will be increasing from last year's payment of the same period to ¥21.00 on 4th of December. This will take the annual payment to 3.8% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for SENKO Group Holdings

SENKO Group Holdings' Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, SENKO Group Holdings' dividend was only 35% of earnings, however it was paying out 623% of free cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

The next year is set to see EPS grow by 10.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

SENKO Group Holdings 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. The dividend has gone from an annual total of ¥16.00 in 2014 to the most recent total annual payment of ¥42.00. This means that it has been growing its distributions at 10% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See SENKO Group Holdings' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. SENKO Group Holdings has impressed us by growing EPS at 6.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for SENKO Group Holdings' prospects of growing its dividend payments in the future.

Our Thoughts On SENKO Group Holdings' Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While SENKO Group Holdings is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for SENKO Group Holdings you should be aware of, and 1 of them makes us a bit uncomfortable. Is SENKO Group Holdings 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.

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