The board of Japan Property Management Center Co.,Ltd. (TSE:3276) has announced that it will pay a dividend on the 12th of March, with investors receiving ¥27.50 per share. This takes the dividend yield to 4.7%, which shareholders will be pleased with.
See our latest analysis for Japan Property Management CenterLtd
Japan Property Management CenterLtd’s Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn’t matter much if the payments can’t be sustained. The last dividend was quite comfortably covered by Japan Property Management CenterLtd’s earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.
Looking forward, earnings per share is forecast to rise by 12.0% over the next year. If the dividend continues on this path, the payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ¥12.50 in 2014 to the most recent total annual payment of ¥55.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
Japan Property Management CenterLtd May Find It Hard To Grow The Dividend
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Japan Property Management CenterLtd has seen earnings per share falling at 2.7% per year over the last five years. A modest decline in earnings isn’t great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. It’s not all bad news though, as the earnings are predicted to rise over the next 12 months – we would just be a bit cautious until this can turn into a longer term trend.
Our Thoughts On Japan Property Management CenterLtd’s Dividend
Overall, we always like to see the dividend being raised, but we don’t think Japan Property Management CenterLtd will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Japan Property Management CenterLtd has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we’ve identified 1 warning sign for Japan Property Management CenterLtd 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.