Nasdaq
華爾街日報Komehyo HoldingsLtd's (TSE:2780) Dividend Will Be ¥53.00
The board of Komehyo Holdings Co.,Ltd. (TSE:2780) has announced that it will pay a dividend on the 9th of June, with investors receiving ¥53.00 per share. This takes the dividend yield to 3.7%, which shareholders will be pleased with.
Komehyo HoldingsLtd's Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Komehyo HoldingsLtd 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 25.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.
Check out our latest analysis for Komehyo HoldingsLtd
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2016, the dividend has gone from ¥28.00 total annually to ¥106.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Komehyo HoldingsLtd 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
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. We are encouraged to see that Komehyo HoldingsLtd has grown earnings per share at 37% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Komehyo HoldingsLtd will make a great income stock. While Komehyo HoldingsLtd is earning enough to cover the payments, the cash flows are lacking. We don't think Komehyo HoldingsLtd is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Komehyo HoldingsLtd (of which 1 is potentially serious!) you should know about. 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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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.