Coca-Cola Bottlers Japan Holdings (TSE:2579) Is Increasing Its Dividend To ¥29.00
Coca-Cola Bottlers Japan Holdings Inc. (TSE:2579) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of March to ¥29.00. Based on this payment, the dividend yield for the company will be 2.2%, which is fairly typical for the industry.
Coca-Cola Bottlers Japan Holdings Might Find It Hard To Continue The Dividend
Unless the payments are sustainable, the dividend yield doesn't mean too much. Even though Coca-Cola Bottlers Japan Holdings isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.
Over the next year, EPS is forecast to rise by 84.8%. It's encouraging to see things moving in the right direction, but this probably won't be enough for the company to turn a profit. However, the positive cash flow ratio gives us some comfort about the sustainability of the dividend.
Check out our latest analysis for Coca-Cola Bottlers Japan Holdings
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 ¥41.00 in 2015 to the most recent total annual payment of ¥58.00. This means that it has been growing its distributions at 3.5% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.
We Could See Coca-Cola Bottlers Japan Holdings' Dividend Growing
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Coca-Cola Bottlers Japan Holdings has impressed us by growing EPS at 6.3% per year over the past five years. Unprofitable companies aren't normally our pick for a dividend stock, but we like the growth that we have been seeing. As long as the company becomes profitable soon, it is on a trajectory that could see it being a solid dividend payer.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think Coca-Cola Bottlers Japan Holdings' payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Coca-Cola Bottlers Japan Holdings that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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