Totech (TSE:9960) Is Due To Pay A Dividend Of ¥24.00

Totech Corporation (TSE:9960) will pay a dividend of ¥24.00 on the 2nd of December. This means that the annual payment will be 3.0% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Totech

Totech Doesn't Earn Enough To Cover Its Payments

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Totech's dividend was comfortably covered by both cash flow and earnings. 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 11.6% if the company continues along the path it has been on recently. If the dividend continues on its recent course, the payout ratio in 12 months could be 107%, which is a bit high and could start applying pressure to the balance sheet.

Totech Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥6.00 in 2014, and the most recent fiscal year payment was ¥73.00. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Totech has been growing its earnings per share at 12% a year over the past five years. Totech definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Totech Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Totech might even raise payments in the future. 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. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Totech stock. Is Totech 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.

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