eGuarantee (TSE:8771) Has Announced That It Will Be Increasing Its Dividend To ¥37.00

eGuarantee, Inc. (TSE:8771) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of July to ¥37.00. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.

See our latest analysis for eGuarantee

eGuarantee's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, eGuarantee was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 12.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 55% by next year, which is in a pretty sustainable range.

eGuarantee Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ¥5.50 total annually to ¥37.00. This means that it has been growing its distributions at 21% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

eGuarantee Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. eGuarantee has impressed us by growing EPS at 7.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like eGuarantee's Dividend

Overall, a dividend increase is always good, and we think that eGuarantee 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for eGuarantee for free with public analyst estimates for the company. Is eGuarantee 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.