Iino Kaiun Kaisha (TSE:9119) Will Pay A Dividend Of ¥24.00

Iino Kaiun Kaisha, Ltd. (TSE:9119) has announced that it will pay a dividend of ¥24.00 per share on the 29th of June. This means that the annual payment will be 3.4% of the current stock price, which is in line with the average for the industry.

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Iino Kaiun Kaisha's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Iino Kaiun Kaisha is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to fall by 10.1%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 42%, which we are pretty comfortable with and we think is feasible on an earnings basis.

See our latest analysis for Iino Kaiun Kaisha

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 ¥10.00 in 2015, and the most recent fiscal year payment was ¥48.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Iino Kaiun Kaisha has grown earnings per share at 20% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Iino Kaiun Kaisha's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Iino Kaiun Kaisha has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is Iino Kaiun Kaisha not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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