Hogy Medical Co.,Ltd. (TSE:3593) has announced a dividend payment of ¥20.00 on November 29th. This equates to an annual payment of 1.9% of the current stock price, which is higher than the industry average.
Prior to this announcement, Hogy Medical Ltd’s dividend was well covered by both cash flow and earnings, indicating sustainability. The company is retaining a significant portion of its earnings to support business growth. Looking ahead, earnings per share are expected to increase by 15.1% in the next year. If the dividend continues on this trajectory, the payout ratio could reach 59% by next year, which is considered sustainable.
Hogy Medical Ltd has a solid track record of paying dividends consistently with minimal fluctuation. The annual payment has grown from ¥54.00 in 2014 to ¥80.00 in the most recent full year, representing a compound annual growth rate of approximately 4.0% over that time period. While the consistency in dividend payments is commendable, the relatively slow growth rate may be less attractive to some investors.
However, there are concerns about the company’s earnings per share, which have declined by approximately 9.9% per year over the past five years. If this trend continues, Hogy Medical Ltd may need to consider reducing or even halting the dividend. Earnings are forecasted to grow in the next 12 months, but caution is advised until a pattern of sustained growth is established.
In summary, while the consistent dividend payments are a positive aspect, the shrinking earnings raise concerns about the sustainability of the dividend in the future. Investors should consider a range of factors beyond just dividend payments when evaluating a company. Without growth in earnings per share over time, dividends may come under pressure from competition or inflation. It may be worth exploring the forecasts of analysts to gain a better understanding of Hogy Medical Ltd’s potential.