Orchestra Holdings' (TSE:6533) Shareholders Will Receive A Bigger Dividend Than Last Year

Orchestra Holdings Inc.'s (TSE:6533) dividend will be increasing from last year's payment of the same period to ¥11.00 on 31st of March. Although the dividend is now higher, the yield is only 1.4%, which is below the industry average.

Check out our latest analysis for Orchestra Holdings

Orchestra Holdings' Payment Could Potentially Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Orchestra Holdings' earnings easily 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 could rise by 9.1% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

Orchestra Holdings Doesn't Have A Long Payment History

It is great to see that Orchestra Holdings 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 dividend has gone from an annual total of ¥4.00 in 2018 to the most recent total annual payment of ¥11.00. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. Orchestra Holdings 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.

Orchestra Holdings Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Orchestra Holdings has seen EPS rising for the last five years, at 9.1% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Orchestra Holdings Looks Like A Great Dividend Stock

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 2 warning signs for Orchestra Holdings that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.