Vital KSK Holdings (TSE:3151) Has Announced A Dividend Of ¥34.00
The board of Vital KSK Holdings, Inc. (TSE:3151) has announced that it will pay a dividend of ¥34.00 per share on the 5th of June. This will take the annual payment to 5.3% of the stock price, which is above what most companies in the industry pay.
Vital KSK Holdings' Projected Earnings Seem Likely To Cover Future Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Vital KSK Holdings' dividend was only 28% of earnings, however it was paying out 135% of free cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.
Looking forward, earnings per share could rise by 33.8% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.
See our latest analysis for Vital KSK Holdings
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 ¥20.00 in 2015, and the most recent fiscal year payment was ¥68.00. This implies that the company grew its distributions at a yearly rate of about 13% 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
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Vital KSK Holdings has grown earnings per share at 34% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Our Thoughts On Vital KSK Holdings' Dividend
In summary, while it's always good to see the dividend being raised, we don't think Vital KSK Holdings' payments are rock solid. While Vital KSK Holdings is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
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. For instance, we've picked out 2 warning signs for Vital KSK Holdings that investors should take into consideration. Is Vital KSK Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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