Torishima Pump Mfg's (TSE:6363) Dividend Will Be ¥31.00
Torishima Pump Mfg. Co., Ltd.'s (TSE:6363) investors are due to receive a payment of ¥31.00 per share on 5th of June. This makes the dividend yield 3.3%, which is above the industry average.
Torishima Pump Mfg's Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Torishima Pump Mfg's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Looking forward, earnings per share is forecast to rise by 26.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.
Check out our latest analysis for Torishima Pump Mfg
Torishima Pump Mfg Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from ¥18.00 total annually to ¥62.00. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
We Could See Torishima Pump Mfg's Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. Torishima Pump Mfg has seen EPS rising for the last five years, at 7.3% per annum. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.
Our Thoughts On Torishima Pump Mfg's Dividend
Overall, we always like to see the dividend being raised, but we don't think Torishima Pump Mfg will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for Torishima Pump Mfg that investors need to be conscious of moving forward. Is Torishima Pump Mfg 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.