Thermae-Yu Holdings' (TSE:3521) Dividend Will Be ¥5.00

Thermae-Yu Holdings Co., Ltd.'s (TSE:3521) investors are due to receive a payment of ¥5.00 per share on 30th of June. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.

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Thermae-Yu Holdings' Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Thermae-Yu Holdings' dividend made up quite a large proportion of earnings but only 34% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Over the next year, EPS could expand by 68.8% if recent trends continue. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 47% which would be quite comfortable going to take the dividend forward.

View our latest analysis for Thermae-Yu Holdings

Thermae-Yu Holdings Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Thermae-Yu Holdings' Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Thermae-Yu Holdings has grown earnings per share at 69% per year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Thermae-Yu Holdings hasn't been doing.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Thermae-Yu Holdings' payments, as there could be some issues with sustaining them into the future. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. Overall, we don't think this company has the makings of a good income 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. As an example, we've identified 1 warning sign for Thermae-Yu Holdings that you should be aware of before investing. 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.