Fukuyama Transporting (TSE:9075) Has Announced A Dividend Of ¥35.00

Fukuyama Transporting Co., Ltd. (TSE:9075) will pay a dividend of ¥35.00 on the 4th of December. This makes the dividend yield 1.8%, which will augment investor returns quite nicely.

View our latest analysis for Fukuyama Transporting

Fukuyama Transporting's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Fukuyama Transporting's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

The next year is set to see EPS grow by 14.6%. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

Fukuyama Transporting 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 ¥50.00 total annually to ¥70.00. This works out to be a compound annual growth rate (CAGR) of approximately 3.4% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that Fukuyama Transporting's earnings per share has fallen at approximately 5.9% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On Fukuyama Transporting's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Fukuyama Transporting is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Fukuyama Transporting that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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