Valor Holdings (TSE:9956) Is Paying Out A Larger Dividend Than Last Year

The board of Valor Holdings Co., Ltd. (TSE:9956) has announced that it will be increasing its dividend by 3.2% on the 13th of June to ¥32.00, up from last year's comparable payment of ¥31.00. This takes the dividend yield to 2.5%, which shareholders will be pleased with.

Check out our latest analysis for Valor Holdings

Valor Holdings' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Valor Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 11.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

Valor Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥30.00 in 2014 to the most recent total annual payment of ¥59.00. This means that it has been growing its distributions at 7.0% 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 May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, Valor Holdings' EPS was effectively flat over the past five years, which could stop the company from paying more every year. While growth may be thin on the ground, Valor Holdings could always pay out a higher proportion of earnings to increase shareholder returns.

Valor 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.

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. For instance, we've picked out 2 warning signs for Valor Holdings that investors should take into consideration. Is Valor Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.