QuickLtd's (TSE:4318) Dividend Will Be Increased To ¥50.00

The board of Quick Co.,Ltd. (TSE:4318) has announced that it will be paying its dividend of ¥50.00 on the 2nd of December, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

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QuickLtd's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, QuickLtd's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

If the trend of the last few years continues, EPS will grow by 9.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for QuickLtd

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ¥16.00 in 2015, and the most recent fiscal year payment was ¥100.00. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. QuickLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

We Could See QuickLtd's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. QuickLtd has seen EPS rising for the last five years, at 9.7% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

QuickLtd Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that QuickLtd is a strong income stock thanks to its track record and growing earnings. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for QuickLtd that investors need to be conscious of moving forward. Is QuickLtd 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.