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Hulic (TSE:3003) Is Increasing Its Dividend To ¥28.50

Simply Wall St · 05/03/2025 00:46

Hulic Co., Ltd. (TSE:3003) will increase its dividend from last year's comparable payment on the 3rd of September to ¥28.50. This makes the dividend yield 3.8%, which is above the industry average.

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Hulic'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. Prior to this announcement, Hulic's earnings easily covered the dividend, but free cash flows were negative. 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 4.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 45% by next year, which is in a pretty sustainable range.

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TSE:3003 Historic Dividend May 3rd 2025

See our latest analysis for Hulic

Hulic Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥11.50 in 2015, and the most recent fiscal year payment was ¥57.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Hulic has been growing its earnings per share at 6.8% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Hulic's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Hulic's payments are rock solid. While Hulic is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Hulic has 2 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.