Tanseisha's (TSE:9743) Dividend Will Be ¥30.00

Tanseisha Co., Ltd.'s (TSE:9743) investors are due to receive a payment of ¥30.00 per share on 6th of October. This takes the dividend yield to 5.7%, which shareholders will be pleased with.

Our free stock report includes 2 warning signs investors should be aware of before investing in Tanseisha. Read for free now.

Tanseisha's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last dividend, Tanseisha is earning enough to cover the payment, but then it makes up 356% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

The next year is set to see EPS grow by 7.5%. If the dividend continues on this path, the payout ratio could be 73% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Tanseisha

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ¥6.67 in 2015, and the most recent fiscal year payment was ¥60.00. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Although it's important to note that Tanseisha's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

Tanseisha's Dividend Doesn't Look Sustainable

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. We don't think Tanseisha 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Tanseisha (1 is a bit concerning!) that you should be aware of before investing. Is Tanseisha not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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