Enjin Co., Ltd. Declares Dividend Payment
The board of Enjin Co., Ltd. (TSE:7370) has officially announced a dividend payment scheduled for January 30, with shareholders set to receive ¥20.00 per share. This decision elevates the dividend yield to an appealing 4.4%, enhancing returns for investors.
Strong Earnings Support Future Dividend Payments
While a healthy dividend yield is appealing, it’s crucial that these payments are sustainable. Enjin’s last dividend was comfortably supported by its earnings, suggesting that a significant portion of profits is being reinvested to drive further growth. Analysts anticipate a 36.4% increase in earnings per share (EPS) over the next year. If the current dividend trends continue, the payout ratio might stabilize at around 66% next year, which falls within a manageable range.
Inconsistency in Enjin’s Dividend History
Enjin’s dividend history has shown some variability, having experienced at least one cut since its inception. Back in 2022, the annual dividend stood at ¥26.00, whereas the latest full-year payment has risen to ¥38.00, indicating an annual growth rate of 13%. However, the previous cuts raise caution, as companies that reduce dividends often do so again. Therefore, investors should be wary of relying solely on dividend income from this stock.
Uncertain Future for Dividend Growth
Given the inconsistency of its dividends, it becomes essential to monitor the growth of earnings per share. Unfortunately, Enjin has seen a decline in EPS of about 6.2% annually over the last five years. A decrease in earnings typically leads to reduced dividends. While there are expectations for earnings to improve in the upcoming year, investors should remain cautious until this growth is consistently observed.
Final Thoughts on Enjin’s Dividend Potential
Although we appreciate a rising dividend, Enjin may not be the ideal choice for those seeking income stocks. The company generates sufficient cash flow to sustain its dividend for a while; however, its performance history raises concerns. Companies with stable dividend policies are generally more attractive to investors than those with inconsistent dividend strategies. Additionally, it is crucial for investors to assess various factors beyond just dividends when evaluating a company. For instance, we have identified three warning signs regarding Enjin that potential investors should be aware of.
Evaluating Enjin’s Market Position
If Enjin does not meet your investment criteria, consider exploring our curated list of top dividend stocks. Valuing a company can be complicated, but our analysis aims to clarify whether Enjin is potentially undervalued or overvalued, complete with fair value estimates, potential risks, dividend insights, insider trading information, and financial health evaluations.