Orient (TSE:8585) Is Due To Pay A Dividend Of ¥40.00
Orient Corporation (TSE:8585) will pay a dividend of ¥40.00 per share on June 26, representing a 4.1% yield. While earnings exceed the dividend, cash flow concerns exist. EPS is expected to grow by 0.5%, with a payout ratio of 46%, indicating potential sustainability. Despite a stable dividend history with an 8.0% CAGR over nine years, earnings per share have stagnated. Caution is advised as cash flow issues may affect future reliability. Investors should consider other factors before investing, as there are warning signs regarding the stock.
The board of Orient Corporation (TSE:8585) has announced that it will pay a dividend on the 26th of June, with investors receiving ¥40.00 per share. This means the annual payment is 4.1% of the current stock price, which is above the average for the industry.
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Orient's Projected Earnings Seem Likely To Cover Future Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Orient's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Over the next year, EPS is forecast to expand by 0.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 46%, which is in the range that makes us comfortable with the sustainability of the dividend.
Check out our latest analysis for Orient
Orient Is Still Building Its Track Record
It is great to see that Orient has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 9 years was ¥20.00 in 2016, and the most recent fiscal year payment was ¥40.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.0% a year over that time. Orient has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
Orient May Find It Hard To Grow The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Orient hasn't seen much change in its earnings per share over the last five years.
The Dividend Could Prove To Be Unreliable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Orient is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Orient you should be aware of, and 1 of them doesn't sit too well with us. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
