AZ-COM MARUWA Holdings (TSE:9090) Has Announced A Dividend Of ¥16.00

AZ-COM MARUWA Holdings Inc.'s (TSE:9090) investors are due to receive a payment of ¥16.00 per share on 27th of June. The payment will take the dividend yield to 2.9%, which is in line with the average for the industry.

See our latest analysis for AZ-COM MARUWA Holdings

AZ-COM MARUWA Holdings' Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last dividend, AZ-COM MARUWA Holdings is earning enough to cover the payment, but then it makes up 143% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Over the next year, EPS is forecast to expand by 13.9%. If the dividend continues on this path, the payout ratio could be 61% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from ¥2.73 total annually to ¥32.00. This means that it has been growing its distributions at 28% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. AZ-COM MARUWA Holdings has seen EPS rising for the last five years, at 9.9% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Our Thoughts On AZ-COM MARUWA Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think AZ-COM MARUWA Holdings' payments are rock solid. While AZ-COM MARUWA Holdings is earning enough to cover the payments, the cash flows are lacking. We don't think AZ-COM MARUWA Holdings is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for AZ-COM MARUWA Holdings that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.