Business Brain Showa-Ota's (TSE:9658) Shareholders Will Receive A Bigger Dividend Than Last Year

Business Brain Showa-Ota Inc. (TSE:9658) will increase its dividend on the 26th of June to ¥39.00, which is 50% higher than last year's payment from the same period of ¥26.00. This takes the dividend yield to 2.7%, which shareholders will be pleased with.

View our latest analysis for Business Brain Showa-Ota

Business Brain Showa-Ota's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Business Brain Showa-Ota was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 71.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.2% by next year, which is in a pretty sustainable range.

Business Brain Showa-Ota Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was ¥8.00, compared to the most recent full-year payment of ¥62.00. This works out to be a compound annual growth rate (CAGR) of approximately 23% a year 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. It's encouraging to see that Business Brain Showa-Ota has been growing its earnings per share at 72% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Business Brain Showa-Ota Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Business Brain Showa-Ota is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. 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 1 warning sign for Business Brain Showa-Ota that investors should take into consideration. Is Business Brain Showa-Ota 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.