Koa Shoji HoldingsLtd (TSE:9273) Is Paying Out A Larger Dividend Than Last Year

Koa Shoji Holdings Co.,Ltd.'s (TSE:9273) dividend will be increasing from last year's payment of the same period to ¥13.00 on 30th of September. This makes the dividend yield about the same as the industry average at 1.8%.

Check out our latest analysis for Koa Shoji HoldingsLtd

Koa Shoji HoldingsLtd's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, Koa Shoji HoldingsLtd's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 13.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 19% by next year, which is in a pretty sustainable range.

Koa Shoji HoldingsLtd Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was ¥5.83, compared to the most recent full-year payment of ¥13.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

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 Koa Shoji HoldingsLtd has been growing its earnings per share at 42% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Koa Shoji HoldingsLtd's Dividend

Overall, a dividend increase is always good, and we think that Koa Shoji HoldingsLtd 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Koa Shoji HoldingsLtd that investors should know about before committing capital to this stock. Is Koa Shoji HoldingsLtd 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.