Hamilton Lane (NASDAQ:HLNE) Has Announced That It Will Be Increasing Its Dividend To $0.445

Hamilton Lane Incorporated (NASDAQ:HLNE) has announced that it will be increasing its periodic dividend on the 7th of July to $0.445, which will be 11% higher than last year's comparable payment amount of $0.40. This makes the dividend yield about the same as the industry average at 2.4%.

View our latest analysis for Hamilton Lane

Hamilton Lane's Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend was quite easily covered by Hamilton Lane's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 56.9%. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

Hamilton Lane Is Still Building Its Track Record

Hamilton Lane's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 6 years was $0.70 in 2017, and the most recent fiscal year payment was $1.60. This means that it has been growing its distributions at 15% per annum over that time. Hamilton Lane 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Hamilton Lane has impressed us by growing EPS at 25% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Hamilton Lane could prove to be a strong dividend payer.

We Really Like Hamilton Lane's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 2 warning signs for Hamilton Lane that you should be aware of before investing. Is Hamilton Lane 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.