The board of Ryohin Keikaku Co., Ltd. (TSE:7453) has announced that it will pay a dividend on the 24th of November, with investors receiving ¥20.00 per share. The dividend yield will be 1.5% based on this payment which is still above the industry average.
Ryohin Keikaku’s earnings easily cover the dividend, indicating that most of its earnings are being retained to grow the business. The next year is set to see EPS grow by 9.3%, with the estimated payout ratio at 33%, making the dividend sustainable.
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years ranged from ¥16.00 in 2014 to ¥40.00 in the most recent fiscal year. While the dividend has grown at a yearly rate of about 9.6% over that duration, caution is advised due to past fluctuations.
While earnings per share have declined over the past five years, there is a prediction of a rise in the next 12 months. However, until this becomes a longer-term trend, caution is recommended.
Overall, Ryohin Keikaku may not be the best dividend stock, as past payments have been unstable. However, the company currently generates enough cash to cover the dividend, making it reliable in the short term. It’s important to note that companies with a consistent dividend policy generally generate greater investor confidence.
Valuation can be complex, but comprehensive analysis can help determine if Ryohin Keikaku is potentially over or undervalued. This analysis includes fair value estimates, risks, dividends, insider transactions, and financial health.
This article is based on historical data and analyst forecasts, using an unbiased methodology. It is not financial advice and does not constitute a recommendation to buy or sell any stock. Simply Wall St aims to provide long-term focused analysis driven by fundamental data.