Square Enix Holdings Co., Ltd. (TSE:9684) has announced a dividend payment of ¥28.00 per share on December 5th. Despite this increase, the dividend yield of 1.4% is only a modest boost for shareholders.
Square Enix Holdings’ dividend is well covered by earnings, with the company easily earning enough to cover the dividend before the announcement. The next year is expected to see EPS grow by 17.0%, leading to a payout ratio of 44%, which is within a sustainable range for the dividend.
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has grown at a rate of about 9.0% annually since 2014, but the history of cuts raises concerns about its stability.
Earnings per share for Square Enix Holdings have been declining at 4.3% per year over the last five years, which could limit the growth prospects for the dividend. While earnings are predicted to grow in the next year, caution is advised until a track record of earnings growth is established.
Overall, while it is positive to see the dividend being raised, Square Enix Holdings may not be a great income stock due to its fluctuating dividend history. Investors looking for a consistent dividend policy may want to explore other options. Additionally, considering factors such as valuation and risks is important before investing in any stock.