Nasdaq
華爾街日報Kamakura Shinsho (TSE:6184) Will Pay A Dividend Of ¥20.00
Kamakura Shinsho, Ltd. (TSE:6184) will pay a dividend of ¥20.00 on the 21st of April. The dividend yield will be 3.2% based on this payment which is still above the industry average.
Kamakura Shinsho'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. Prior to this announcement, Kamakura Shinsho's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 174% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.
Earnings per share could rise by 33.4% over the next year if things go the same way as they have for the last few years. If recent patterns in the dividend continue, the payout ratio in 12 months could be 81% which is a bit high but can definitely be sustainable.
View our latest analysis for Kamakura Shinsho
Kamakura Shinsho's Dividend Has Lacked Consistency
It's comforting to see that Kamakura Shinsho has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of ¥1.50 in 2017 to the most recent total annual payment of ¥20.00. This implies that the company grew its distributions at a yearly rate of about 38% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
Kamakura Shinsho's Dividend Might Lack Growth
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Kamakura Shinsho has seen EPS rising for the last five years, at 33% per annum. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.
The Dividend Could Prove To Be Unreliable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Strong earnings growth means Kamakura Shinsho has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 Kamakura Shinsho that investors need to be conscious of moving forward. 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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