Orient (TSE:8585) Is Paying Out A Dividend Of ¥40.00

Orient Corporation's (TSE:8585) investors are due to receive a payment of ¥40.00 per share on 26th of June. This means the annual payment is 3.9% of the current stock price, which is above the average for the industry.

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Orient's Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment was quite easily covered by earnings, but it made up 97% 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.

Looking forward, earnings per share is forecast to rise by 0.5% over the next year. If the dividend continues on this path, the payout ratio could be 46% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Orient

Orient Is Still Building Its Track Record

It is great to see that Orient has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of ¥20.00 in 2016 to the most recent total annual payment of ¥40.00. This implies that the company grew its distributions at a yearly rate of about 8.0% over that duration. Orient has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Orient May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. However, Orient's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Orient's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Orient's payments, as there could be some issues with sustaining them into the future. While Orient is earning enough to cover the payments, the cash flows are lacking. We don't think Orient 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Orient you should be aware of, and 1 of them doesn't sit too well with us. 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.