Torigoe (TSE:2009) Is Increasing Its Dividend To ¥44.00
The Torigoe Co., Ltd.'s (TSE:2009) dividend will be increasing from last year's payment of the same period to ¥44.00 on 31st of March. This will take the annual payment to 3.9% of the stock price, which is above what most companies in the industry pay.
Torigoe's Projections Indicate Future Payments May Be Unsustainable
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Torigoe's dividend made up quite a large proportion of earnings but only 74% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.
Earnings per share could rise by 11.0% over the next year if things go the same way as they have for the last few years. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 95% over the next year.
View our latest analysis for Torigoe
Torigoe Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥12.00, compared to the most recent full-year payment of ¥44.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
Dividend Growth Could Be Constrained
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Torigoe has seen EPS rising for the last five years, at 11% per annum. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.
In Summary
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend is easily covered by cash flows and has a good track record, but we think the payout ratio might be a bit high. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Torigoe management tenure, salary, and performance. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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