Kaspi.kz (LON:KSPI) Has Announced That It Will Be Increasing Its Dividend To KZT1.78

The board of Kaspi.kz Joint Stock Company (LON:KSPI) has announced that it will be paying its dividend of KZT1.78 on the 1st of January, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 7.9%.

See our latest analysis for Kaspi.kz

Kaspi.kz's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before this announcement, Kaspi.kz was paying out 71% of earnings, but a comparatively small 50% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

Over the next year, EPS is forecast to expand by 73.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 0.1%, which is in the range that makes us comfortable with the sustainability of the dividend.

Kaspi.kz's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2019, the annual payment back then was KZT746.00, compared to the most recent full-year payment of KZT3400.00. This means that it has been growing its distributions at 46% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Kaspi.kz has grown earnings per share at 48% per year over the past five years. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why Kaspi.kz is not retaining those earnings to reinvest in growth.

Kaspi.kz Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 1 warning sign for Kaspi.kz 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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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.