Paltac's (TSE:8283) Dividend Will Be ¥45.00

The board of Paltac Corporation (TSE:8283) has announced that it will pay a dividend of ¥45.00 per share on the 3rd of June. The payment will take the dividend yield to 2.1%, which is in line with the average for the industry.

Check out our latest analysis for Paltac

Paltac's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, Paltac's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 13.0%. If the dividend continues on this path, the payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.

Paltac Doesn't Have A Long Payment History

Paltac's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the dividend has gone from ¥68.00 total annually to ¥90.00. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. Paltac has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Paltac has only grown its earnings per share at 2.7% per annum over the past five years. While growth may be thin on the ground, Paltac could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Paltac's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Paltac that investors should take into consideration. 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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