SG HoldingsLtd's (TSE:9143) Dividend Will Be ¥26.00

The board of SG Holdings Co.,Ltd. (TSE:9143) has announced that it will pay a dividend on the 4th of December, with investors receiving ¥26.00 per share. This means the dividend yield will be fairly typical at 3.0%.

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SG HoldingsLtd's Future Dividend Projections Appear Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, SG HoldingsLtd's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 8.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 59%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for SG HoldingsLtd

SG HoldingsLtd Doesn't Have A Long Payment History

It is great to see that SG HoldingsLtd has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the dividend has gone from ¥5.50 total annually to ¥53.00. This works out to be a compound annual growth rate (CAGR) of approximately 33% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

SG HoldingsLtd Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. SG HoldingsLtd has seen EPS rising for the last five years, at 5.8% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

Overall, a consistent dividend is a good thing, and we think that SG HoldingsLtd has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 10 analysts we track are forecasting for SG HoldingsLtd for free with public analyst estimates for the company. Is SG HoldingsLtd 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.