WITZ (TSE:4440) Is Paying Out A Larger Dividend Than Last Year

WITZ Corporation's (TSE:4440) dividend will be increasing from last year's payment of the same period to ¥15.00 on 1st of December. Based on this payment, the dividend yield for the company will be 1.2%, which is fairly typical for the industry.

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WITZ's Payment Could Potentially Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, WITZ's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 10.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 16% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for WITZ

WITZ Is Still Building Its Track Record

It is great to see that WITZ has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of ¥3.00 in 2019 to the most recent total annual payment of ¥15.00. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. WITZ has impressed us by growing EPS at 10% per year over the past five years. WITZ definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like WITZ's Dividend

Overall, a dividend increase is always good, and we think that WITZ 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. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for WITZ (2 are concerning!) that you should be aware of before investing. Is WITZ 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.