Kondotec (TSE:7438) Is Increasing Its Dividend To ¥26.00

The board of Kondotec Inc. (TSE:7438) has announced that the dividend on 26th of November will be increased to ¥26.00, which will be 13% higher than last year's payment of ¥23.00 which covered the same period. This takes the dividend yield to 3.0%, which shareholders will be pleased with.

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Kondotec's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Kondotec was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 3.5% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 40% by next year, which is in a pretty sustainable range.

View our latest analysis for Kondotec

Kondotec 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 2015, the annual payment back then was ¥20.00, compared to the most recent full-year payment of ¥46.00. This means that it has been growing its distributions at 8.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. However, Kondotec has only grown its earnings per share at 3.5% per annum over the past five years. While EPS growth is quite low, Kondotec has the option to increase the payout ratio to return more cash to shareholders.

Kondotec Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Kondotec stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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