HYUGA PRIMARY CARE Co.,Ltd. (TSE:7133) will pay a dividend of ¥20.00 on the 29th of June. This means that the annual payment will be 1.8% of the current stock price, which is in line with the average for the industry.
We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, HYUGA PRIMARY CARELtd's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Looking forward, earnings per share could rise by 5.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.
Check out our latest analysis for HYUGA PRIMARY CARELtd
It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 5.0% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, HYUGA PRIMARY CARELtd could always pay out a higher proportion of earnings to increase shareholder returns.
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While HYUGA PRIMARY CARELtd is earning enough to cover the payments, the cash flows are lacking. We don't think HYUGA PRIMARY CARELtd 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. However, there are other things to consider for investors when analysing stock performance. To that end, HYUGA PRIMARY CARELtd has 4 warning signs (and 1 which is a bit concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.