AZ-COM MARUWA Holdings (TSE:9090) Is Due To Pay A Dividend Of ¥16.00

The board of AZ-COM MARUWA Holdings Inc. (TSE:9090) has announced that it will pay a dividend of ¥16.00 per share on the 2nd of December. This means the dividend yield will be fairly typical at 2.8%.

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AZ-COM MARUWA Holdings' Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, AZ-COM MARUWA Holdings' earnings easily covered the dividend, but free cash flows were negative. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

The next year is set to see EPS grow by 12.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 63% by next year, which is in a pretty sustainable range.

Check out our latest analysis for AZ-COM MARUWA Holdings

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was ¥2.73, compared to the most recent full-year payment of ¥32.00. This means that it has been growing its distributions at 28% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

AZ-COM MARUWA Holdings Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. AZ-COM MARUWA Holdings has impressed us by growing EPS at 7.6% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for AZ-COM MARUWA Holdings that investors should take into consideration. Is AZ-COM MARUWA Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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