Gakken Holdings Co., Ltd.'s (TSE:9470) investors are due to receive a payment of ¥12.50 per share on 25th of December. This makes the dividend yield 2.6%, which will augment investor returns quite nicely.
View our latest analysis for Gakken Holdings
Gakken Holdings' Payment Has Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Gakken Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 9.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.
Gakken Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥12.50 total annually to ¥25.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 2.7% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Gakken Holdings has the option to increase the payout ratio to return more cash to shareholders.
Gakken Holdings Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Gakken Holdings stock. Is Gakken Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.
About TSE:9470
Gakken Holdings
Engages in educational, and healthcare and nursing business in Japan and internationally.
Excellent balance sheet established dividend payer.
