i Cubed Systems' (TSE:4495) Upcoming Dividend Will Be Larger Than Last Year's

i Cubed Systems, Inc. (TSE:4495) has announced that it will be increasing its periodic dividend on the 26th of September to ¥34.00, which will be 6.3% higher than last year's comparable payment amount of ¥32.00. This makes the dividend yield about the same as the industry average at 1.7%.

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i Cubed Systems' Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, i Cubed Systems was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 2.6% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

View our latest analysis for i Cubed Systems

i Cubed Systems Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from ¥10.00 total annually to ¥32.00. This means that it has been growing its distributions at 34% per annum over that time. i Cubed Systems has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

i Cubed Systems May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, i Cubed Systems has only grown its earnings per share at 2.6% per annum over the past three years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Our Thoughts On i Cubed Systems' Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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 1 warning sign for i Cubed Systems 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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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.