TechnoPro Holdings (TSE:6028) Is Increasing Its Dividend To ¥55.00

TechnoPro Holdings, Inc.'s (TSE:6028) periodic dividend will be increasing on the 29th of September to ¥55.00, with investors receiving 10% more than last year's ¥50.00. This will take the annual payment to 2.9% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for TechnoPro Holdings

TechnoPro Holdings' Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, TechnoPro Holdings' earnings easily 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 is forecast to expand by 39.5%. 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.

TechnoPro Holdings' Dividend Has Lacked Consistency

TechnoPro Holdings has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was ¥31.06 in 2015, and the most recent fiscal year payment was ¥75.00. This means that it has been growing its distributions at 10% per annum over that time. TechnoPro Holdings 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.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that TechnoPro Holdings has been growing its earnings per share at 13% a year over the past five years. TechnoPro Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

TechnoPro Holdings 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. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for TechnoPro Holdings that investors need to be conscious of moving forward. 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.