Urbanet CorporationLtd (TSE:3242) Has Announced A Dividend Of ¥10.00

The board of Urbanet Corporation Co.,Ltd. (TSE:3242) has announced that it will pay a dividend of ¥10.00 per share on the 29th of September. The dividend yield will be 4.7% based on this payment which is still above the industry average.

See our latest analysis for Urbanet CorporationLtd

Urbanet CorporationLtd's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Urbanet CorporationLtd's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 6.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.

Urbanet CorporationLtd's Dividend Has Lacked Consistency

Urbanet CorporationLtd has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2015, the dividend has gone from ¥14.00 total annually to ¥20.00. This works out to be a compound annual growth rate (CAGR) of approximately 4.0% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

We Could See Urbanet CorporationLtd's Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Urbanet CorporationLtd has grown earnings per share at 6.0% per year over the past five years. Urbanet CorporationLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Urbanet CorporationLtd's Dividend

Overall, a consistent dividend is a good thing, and we think that Urbanet CorporationLtd has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. For example, we've picked out 3 warning signs for Urbanet CorporationLtd that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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