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Zuiko (TSE:6279) Is Increasing Its Dividend To ¥8.00

Simply Wall St · 06/22 00:09

Zuiko Corporation (TSE:6279) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of November to ¥8.00. Even though the dividend went up, the yield is still quite low at only 1.6%.

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Zuiko Might Find It Hard To Continue The Dividend

If it is predictable over a long period, even low dividend yields can be attractive. Zuiko is unprofitable despite paying a dividend, and it is paying out 103% of its free cash flow. These payout levels would generally be quite difficult to keep up.

Recent, EPS has fallen by 16.1%, so this could continue over the next year. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

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TSE:6279 Historic Dividend June 22nd 2025

Check out our latest analysis for Zuiko

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of ¥17.50 in 2015 to the most recent total annual payment of ¥16.00. Payments have been decreasing at a very slow pace in this time period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Zuiko's earnings per share has shrunk at 16% a year over the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

We're Not Big Fans Of Zuiko's Dividend

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the 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. As an example, we've identified 1 warning sign for Zuiko that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.