Takamatsu Construction Group's (TSE:1762) Dividend Will Be ¥45.00
The board of Takamatsu Construction Group Co., Ltd. (TSE:1762) has announced that it will pay a dividend of ¥45.00 per share on the 19th of June. Although the dividend is now higher, the yield is only 2.3%, which is below the industry average.
Takamatsu Construction Group's Payment Could Potentially Have Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end. Takamatsu Construction Group is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. 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.
Over the next year, EPS is forecast to expand by 6.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
See our latest analysis for Takamatsu Construction Group
Takamatsu Construction Group Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was ¥27.00, compared to the most recent full-year payment of ¥90.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Takamatsu Construction Group has only grown its earnings per share at 4.9% per annum over the past five years. While growth may be thin on the ground, Takamatsu Construction Group could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Takamatsu Construction Group's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Takamatsu Construction Group that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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