I-Net's (TSE:9600) Dividend Will Be ¥28.00

The board of I-Net Corp. (TSE:9600) has announced that it will pay a dividend on the 26th of June, with investors receiving ¥28.00 per share. This will take the dividend yield to an attractive 2.9%, providing a nice boost to shareholder returns.

View our latest analysis for I-Net

I-Net's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, I-Net's dividend was only 20% of earnings, however it was paying out 110% of free cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS could expand by 5.5% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

I-Net Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥22.73 in 2015, and the most recent fiscal year payment was ¥56.00. This means that it has been growing its distributions at 9.4% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

I-Net Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. I-Net has impressed us by growing EPS at 5.5% per year over the past five years. I-Net definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for I-Net that investors should take into consideration. Is I-Net 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.