Korn Ferry (NYSE:KFY) Has Announced That It Will Be Increasing Its Dividend To $0.18

Korn Ferry (NYSE:KFY) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of July to $0.18. This takes the annual payment to 1.5% of the current stock price, which is about average for the industry.

View our latest analysis for Korn Ferry

Korn Ferry's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Korn Ferry was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 10.6%. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Korn Ferry Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2015, the annual payment back then was $0.40, compared to the most recent full-year payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 7.6% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

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. We are encouraged to see that Korn Ferry has grown earnings per share at 10% per year over the past five years. Korn Ferry definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Korn Ferry Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Korn Ferry 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 in all, this checks a lot of the boxes we look for when choosing an 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Korn Ferry that you should be aware of before investing. Is Korn Ferry not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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