DIP (TSE:2379) Is Due To Pay A Dividend Of ¥47.00
DIP Corporation (TSE:2379) will pay a dividend of ¥47.00 on November 18, yielding 4.0%. While the dividend is currently covered by cash flow and earnings, concerns arise from past cuts and inconsistent payments. The projected EPS growth of 10.4% may support a sustainable payout ratio of 60% next year. However, stagnant earnings over the past five years raise doubts about long-term dividend growth. Overall, DIP may not be a strong choice for income-focused investors due to its irregular dividend history.
DIP Corporation (TSE:2379) will pay a dividend of ¥47.00 on the 18th of November. This makes the dividend yield 4.0%, which will augment investor returns quite nicely.
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DIP's Projected Earnings Seem Likely To Cover Future Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, DIP's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to expand by 10.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 60% by next year, which is in a pretty sustainable range.
See our latest analysis for DIP
DIP's Dividend Has Lacked Consistency
It's comforting to see that DIP has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 8 years was ¥43.00 in 2017, and the most recent fiscal year payment was ¥95.00. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
DIP 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. Although it's important to note that DIP's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think DIP is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for DIP that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
