TDC SOFT's (TSE:4687) Upcoming Dividend Will Be Larger Than Last Year's

TDC SOFT Inc. (TSE:4687) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of June to ¥30.00. This takes the dividend yield to 2.3%, which shareholders will be pleased with.

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TDC SOFT's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, TDC SOFT's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 6.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 41% by next year, which is in a pretty sustainable range.

View our latest analysis for TDC SOFT

TDC SOFT Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥3.50 in 2015 to the most recent total annual payment of ¥30.00. This means that it has been growing its distributions at 24% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. TDC SOFT has impressed us by growing EPS at 20% per year over the past five years. TDC SOFT definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like TDC SOFT's Dividend

Overall, a dividend increase is always good, and we think that TDC SOFT is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in TDC SOFT stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.