AZ-COM MARUWA Holdings (TSE:9090) Will Pay 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. This makes the dividend yield about the same as the industry average at 2.6%.

View our latest analysis for AZ-COM MARUWA Holdings

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. 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 13.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 60%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ¥2.73 in 2015, and the most recent fiscal year payment was ¥32.00. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that AZ-COM MARUWA Holdings has grown earnings per share at 9.6% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Our Thoughts On AZ-COM MARUWA Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think AZ-COM MARUWA Holdings will make a great income stock. While AZ-COM MARUWA Holdings is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. 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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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.