Fukuyama Transporting (TSE:9075) Will Pay A Larger Dividend Than Last Year At ¥38.00

The board of Fukuyama Transporting Co., Ltd. (TSE:9075) has announced that it will be paying its dividend of ¥38.00 on the 3rd of December, an increased payment from last year's comparable dividend. This will take the annual payment to 2.2% of the stock price, which is above what most companies in the industry pay.

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Fukuyama Transporting's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Fukuyama Transporting's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to expand by 6.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Fukuyama Transporting

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. The annual payment during the last 10 years was ¥50.00 in 2015, and the most recent fiscal year payment was ¥76.00. This implies that the company grew its distributions at a yearly rate of about 4.3% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Fukuyama Transporting 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, initial appearances might be deceiving. Unfortunately, Fukuyama Transporting's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Fukuyama Transporting's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Fukuyama Transporting's payments are rock solid. 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. As an example, we've identified 2 warning signs for Fukuyama Transporting that you should be aware of before investing. Is Fukuyama Transporting not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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