Koa Shoji HoldingsLtd's (TSE:9273) Dividend Will Be Increased To ¥13.00

Koa Shoji Holdings Co.,Ltd. (TSE:9273) will increase its dividend from last year's comparable payment on the 30th of September to ¥13.00. Even though the dividend went up, the yield is still quite low at only 1.5%.

Check out our latest analysis for Koa Shoji HoldingsLtd

Koa Shoji HoldingsLtd's Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, Koa Shoji HoldingsLtd's earnings easily 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 22.5%. If the dividend continues on this path, the payout ratio could be 17% by next year, which we think can be pretty sustainable going forward.

Koa Shoji HoldingsLtd Doesn't Have A Long Payment History

It is great to see that Koa Shoji HoldingsLtd has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 6 years was ¥5.83 in 2018, and the most recent fiscal year payment was ¥13.00. This means that it has been growing its distributions at 14% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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 Koa Shoji HoldingsLtd has been growing its earnings per share at 42% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Koa Shoji HoldingsLtd in our latest insider ownership analysis. 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.