PCI Holdings, Inc.'s (TSE:3918) investors are due to receive a payment of ¥17.00 per share on 10th of June. This makes the dividend yield 3.6%, which is above the industry average.
View our latest analysis for PCI Holdings
PCI Holdings' Dividend Is Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, PCI Holdings was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share could rise by 18.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
PCI Holdings Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 9 years was ¥17.50 in 2015, and the most recent fiscal year payment was ¥35.00. This implies that the company grew its distributions at a yearly rate of about 8.0% over that duration. PCI Holdings 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 Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. PCI Holdings has seen EPS rising for the last five years, at 18% per annum. PCI Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like PCI Holdings' Dividend
Overall, a dividend increase is always good, and we think that PCI Holdings is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for PCI Holdings that investors should take into consideration. Is PCI 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.
About TSE:3918
Flawless balance sheet low.
