Kyoritsu Maintenance's (TSE:9616) Dividend Will Be ¥23.00
The board of Kyoritsu Maintenance Co., Ltd. (TSE:9616) has announced that it will pay a dividend on the 29th of June, with investors receiving ¥23.00 per share. This makes the dividend yield 1.6%, which is above the industry average.
Kyoritsu Maintenance's Future Dividend Projections Appear Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Kyoritsu Maintenance was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
The next year is set to see EPS grow by 7.7%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for Kyoritsu Maintenance
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was ¥10.42, compared to the most recent full-year payment of ¥46.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Kyoritsu Maintenance has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Kyoritsu Maintenance has grown earnings per share at 62% 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.
We should note that Kyoritsu Maintenance has issued stock equal to 11% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
Our Thoughts On Kyoritsu Maintenance's Dividend
Overall, we always like to see the dividend being raised, but we don't think Kyoritsu Maintenance will make a great income stock. While Kyoritsu Maintenance is earning enough to cover the payments, the cash flows are lacking. We don't think Kyoritsu Maintenance is a great stock to add to your portfolio if income is your focus.
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. As an example, we've identified 1 warning sign for Kyoritsu Maintenance that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.