Startia HoldingsInc (TSE:3393) Has Announced That It Will Be Increasing Its Dividend To ¥56.00

The board of Startia Holdings,Inc. (TSE:3393) has announced that it will be paying its dividend of ¥56.00 on the 24th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 4.6%, which is above the industry average.

Check out our latest analysis for Startia HoldingsInc

Startia HoldingsInc's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite comfortably covered by Startia HoldingsInc's earnings, but it was a bit tighter on the cash flow front. The business is earning enough to make the dividend feasible, but the cash payout ratio of 76% indicates it is more focused on returning cash to shareholders than growing the business.

Looking forward, earnings per share could rise by 51.0% 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 42% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of ¥4.28 in 2015 to the most recent total annual payment of ¥102.00. This works out to be a compound annual growth rate (CAGR) of approximately 37% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Startia HoldingsInc has seen EPS rising for the last five years, at 51% per annum. Startia HoldingsInc is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Startia HoldingsInc will make a great income stock. While Startia HoldingsInc is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Startia HoldingsInc that investors should take into consideration. Is Startia HoldingsInc 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.