Japan Airport Terminal (TSE:9706) Has Announced A Dividend Of ¥35.00

Japan Airport Terminal Co., Ltd.'s (TSE:9706) investors are due to receive a payment of ¥35.00 per share on 27th of June. This means that the dividend yield is 1.6%, which is a bit low when comparing to other companies in the industry.

View our latest analysis for Japan Airport Terminal

Japan Airport Terminal's Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Japan Airport Terminal's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 0.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥13.00 in 2015, and the most recent fiscal year payment was ¥70.00. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Japan Airport Terminal has seen EPS rising for the last five years, at 17% per annum. Japan Airport Terminal definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Japan Airport Terminal's Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like Japan Airport Terminal does. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

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. For example, we've picked out 1 warning sign for Japan Airport Terminal that investors should know about before committing capital to this stock. Is Japan Airport Terminal 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.