The board of Valor Holdings Co., Ltd. (TSE:9956) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥29.00 per share. This will take the annual payment to 2.8% of the stock price, which is above what most companies in the industry pay.
View our latest analysis for Valor Holdings
Valor 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. Before making this announcement, Valor Holdings was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 6.6% over the next year. If the dividend continues on this path, the payout ratio could be 30% by next year, which we think can be pretty sustainable going forward.
Valor Holdings Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from ¥30.00 total annually to ¥68.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.5% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
We Could See Valor Holdings' Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. 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. Valor Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Valor Holdings' Dividend
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 of these factors considered, we think this has solid potential as a dividend 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. As an example, we've identified 1 warning sign for Valor Holdings that you should be aware of before investing. 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.
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About TSE:9956
Undervalued with solid track record and pays a dividend.
