Nice's (TSE:8089) Dividend Will Be ¥28.00
Nice Corporation (TSE:8089) will pay a dividend of ¥28.00 per share on December 5, yielding 4.2%. While earnings cover the dividend, negative free cash flows raise sustainability concerns. EPS is projected to grow by 31.1% over the next year, potentially leading to a 22% payout ratio. Despite a history of dividend cuts, recent EPS growth suggests future potential. However, due to cash flow issues, Nice may not be ideal for income-focused investors. Caution is advised as there are warning signs for the company moving forward.
The board of Nice Corporation (TSE:8089) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥28.00 per share. This takes the dividend yield to 4.2%, which shareholders will be pleased with.
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Nice's Future Dividend Projections Appear Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Nice's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
If the trend of the last few years continues, EPS will grow by 31.1% over the next 12 months. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for Nice
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of ¥40.00 in 2015 to the most recent total annual payment of ¥72.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Nice has seen EPS rising for the last five years, at 31% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Our Thoughts On Nice's Dividend
Overall, we always like to see the dividend being raised, but we don't think Nice will make a great income stock. While Nice is earning enough to cover the payments, the cash flows are lacking. We don't think Nice is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Nice that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
