Fujita Kanko (TSE:9722) Is Paying Out A Dividend Of ¥40.00
The board of Fujita Kanko Inc. (TSE:9722) has announced that it will pay a dividend of ¥40.00 per share on the 27th of March. This makes the dividend yield 1.5%, which will augment investor returns quite nicely.
Fujita Kanko's Future Dividend Projections Appear Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Fujita Kanko's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 4.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.
View our latest analysis for Fujita Kanko
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The last annual payment of ¥40.00 was flat on the annual payment from10 years ago. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fujita Kanko has impressed us by growing EPS at 38% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
Fujita Kanko Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
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. For instance, we've picked out 2 warning signs for Fujita Kanko that investors should take into consideration. Is Fujita Kanko not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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