ASO International's (TSE:9340) Upcoming Dividend Will Be Larger Than Last Year's

ASO International, Inc. (TSE:9340) will increase its dividend on the 30th of September to ¥35.00, which is 67% higher than last year's payment from the same period of ¥21.00. This will take the annual payment to 2.1% of the stock price, which is above what most companies in the industry pay.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that ASO International's stock price has increased by 46% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for ASO International

ASO International's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, ASO International's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the company can't turn things around, EPS could fall by 7.2% over the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 89% in the next 12 months which is on the higher end of the range we would say is sustainable.

ASO International Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth May Be Hard To Come By

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Over the past five years, it looks as though ASO International's EPS has declined at around 7.2% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On ASO International's Dividend

Overall, we always like to see the dividend being raised, but we don't think ASO International will make a great income stock. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for ASO International that you should be aware of before investing. Is ASO International 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.