Koa Shoji HoldingsLtd (TSE:9273) Will Pay A Larger Dividend Than Last Year At ¥13.00

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 takes the annual payment to 1.9% of the current stock price, which is about average for the industry.

View 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. Before making this announcement, Koa Shoji HoldingsLtd 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.

Looking forward, earnings per share is forecast to rise by 9.3% over the next year. If the dividend continues on this path, the payout ratio could be 19% by next year, which we think can be pretty sustainable going forward.

Koa Shoji HoldingsLtd Is Still Building Its Track Record

Koa Shoji HoldingsLtd's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2018, the dividend has gone from ¥5.83 total annually to ¥13.00. This means that it has been growing its distributions at 14% per annum over that time. Koa Shoji HoldingsLtd 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 could be attracted to the stock based on the quality of its payment history. Koa Shoji HoldingsLtd has impressed us by growing EPS at 43% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

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.

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. Taking the debate a bit further, we've identified 1 warning sign for Koa Shoji HoldingsLtd that investors need to be conscious of moving forward. 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.