Vt Holdings Co.,Ltd.'s (TSE:7593) investors are due to receive a payment of ¥12.00 per share on 11th of June. The dividend yield will be 5.1% based on this payment which is still above the industry average.
See our latest analysis for Vt HoldingsLtd
Vt HoldingsLtd's Payment Could Potentially Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Vt HoldingsLtd's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to rise by 9.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 42% by next year, which is in a pretty sustainable range.
Vt HoldingsLtd Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from ¥10.67 total annually to ¥24.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
We Could See Vt HoldingsLtd's Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Vt HoldingsLtd has been growing its earnings per share at 7.7% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Vt HoldingsLtd's Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Vt HoldingsLtd that investors should take into consideration. Is Vt 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.
About TSE:7593
6 star dividend payer and undervalued.
