Logistec (TSE:LGT.B) Will Pay A Larger Dividend Than Last Year At CA$0.11

Logistec Corporation (TSE:LGT.B) has announced that it will be increasing its dividend on the 8th of October to CA$0.11. Even though the dividend went up, the yield is still quite low at only 0.9%.

Check out our latest analysis for Logistec

Logistec's Earnings Easily Cover the Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Logistec's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 11.7% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which is in the range that makes us comfortable with the sustainability of the dividend.

Logistec Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2011, the dividend has gone from CA$0.19 to CA$0.43. This implies that the company grew its distributions at a yearly rate of about 8.7% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Logistec has grown earnings per share at 12% per year over the past five years. Logistec definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Logistec's Dividend

Overall, a dividend increase is always good, and we think that Logistec is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Logistec that investors should take into consideration. We have also put together a list of global stocks with a solid dividend.

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