SG Holdings Co.,Ltd.'s (TSE:9143) investors are due to receive a payment of ¥26.00 per share on 5th of June. This means the dividend yield will be fairly typical at 2.7%.
See our latest analysis for SG HoldingsLtd
SG HoldingsLtd's Dividend Is Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before this announcement, SG HoldingsLtd was paying out 72% of earnings, but a comparatively small 39% of free cash flows. This leaves plenty of cash for reinvestment into the business.
The next year is set to see EPS grow by 20.1%. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.
SG HoldingsLtd Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. Since 2018, the dividend has gone from ¥5.50 total annually to ¥52.00. This works out to be a compound annual growth rate (CAGR) of approximately 45% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. SG HoldingsLtd has impressed us by growing EPS at 11% per year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.
SG HoldingsLtd Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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. As an example, we've identified 2 warning signs for SG HoldingsLtd that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
About TSE:9143
SG HoldingsLtd
Through its subsidiaries, is involved in the delivery, logistics, real estate, and other businesses in Japan and internationally.
Flawless balance sheet with limited growth.
