The board of Valor Holdings Co., Ltd. (TSE:9956) has announced that it will pay a dividend of ¥29.00 per share on the 5th of December. This makes the dividend yield 2.9%, which is above the industry average.
See our latest analysis for Valor Holdings
Valor Holdings' Payment Has Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Valor Holdings' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 6.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.
Valor Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥30.00 in 2014, and the most recent fiscal year payment was ¥68.00. This means that it has been growing its distributions at 8.5% 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.
Valor Holdings Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Valor Holdings has been growing its earnings per share at 7.8% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Valor Holdings' Dividend
Overall, a dividend increase is always good, and we think that Valor Holdings is a strong income stock thanks to its track record and growing earnings. 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.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Valor Holdings that investors need to be conscious of moving forward. Is Valor 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:9956
Solid track record established dividend payer.
