Kanamic NetworkLTD's (TSE:3939) Shareholders Will Receive A Bigger Dividend Than Last Year

Kanamic Network Co.,LTD (TSE:3939) will increase its dividend from last year's comparable payment on the 25th of December to ¥6.50. This will take the annual payment to 1.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Kanamic NetworkLTD

Kanamic NetworkLTD's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Kanamic NetworkLTD was easily earning enough to 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 108.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Kanamic NetworkLTD Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of ¥2.00 in 2020 to the most recent total annual payment of ¥6.50. This means that it has been growing its distributions at 34% per annum over that time. Kanamic NetworkLTD has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Kanamic NetworkLTD has been growing its earnings per share at 12% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Kanamic NetworkLTD's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. See if management have their own wealth at stake, by checking insider shareholdings in Kanamic NetworkLTD stock. Is Kanamic NetworkLTD not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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