Kawasaki Kisen Kaisha (TSE:9107) Is Due To Pay A Dividend Of ¥50.00

The board of Kawasaki Kisen Kaisha, Ltd. (TSE:9107) has announced that it will pay a dividend of ¥50.00 per share on the 24th of June. The dividend yield of 4.6% is still a nice boost to shareholder returns, despite the cut.

View our latest analysis for Kawasaki Kisen Kaisha

Kawasaki Kisen Kaisha'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. However, Kawasaki Kisen Kaisha's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to fall by 27.2%. If the dividend continues along recent trends, we estimate the payout ratio could be 34%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of ¥5.56 in 2015 to the most recent total annual payment of ¥100.00. This means that it has been growing its distributions at 34% 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 Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Kawasaki Kisen Kaisha has seen EPS rising for the last five years, at 21% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Kawasaki Kisen Kaisha Looks Like A Great Dividend Stock

Overall, we think that Kawasaki Kisen Kaisha could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an 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. Case in point: We've spotted 2 warning signs for Kawasaki Kisen Kaisha (of which 1 is potentially serious!) you should know about. Is Kawasaki Kisen Kaisha 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.