SRA Holdings' (TSE:3817) Dividend Will Be ¥90.00

SRA Holdings, Inc. (TSE:3817) has announced that it will pay a dividend of ¥90.00 per share on the 1st of December. This makes the dividend yield 3.5%, which is above the industry average.

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SRA Holdings' Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, SRA Holdings was paying out 79% of earnings, but a comparatively small 41% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Earnings per share could rise by 10.0% over the next year if things go the same way as they have for the last few years. If recent patterns in the dividend continue, the payout ratio in 12 months could be 83% which is a bit high but can definitely be sustainable.

Check out our latest analysis for SRA Holdings

SRA Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was ¥56.00, compared to the most recent full-year payment of ¥180.00. This means that it has been growing its distributions at 12% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See SRA Holdings' Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. SRA Holdings has impressed us by growing EPS at 10.0% per year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

Our Thoughts On SRA Holdings' Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. With a reasonable track record and good earnings coverage, the payments look sustainable. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 2 warning signs for SRA Holdings that investors should take into consideration. Is SRA Holdings 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.