Paltac (TSE:8283) Has Announced That It Will Be Increasing Its Dividend To ¥57.00
Paltac Corporation (TSE:8283) has announced an increase in its dividend to ¥57.00, yielding 2.6%, above the industry average. The dividend is well-covered by earnings, with a forecasted 3.8% rise in earnings per share next year. Despite a short dividend history of four years, the company has shown a compound annual growth rate of 11%. While the payout ratio is currently low, earnings growth has been slow at 2.6% per annum. Overall, the dividend increase is seen as sustainable, but investors should consider the company's limited track record.
Paltac Corporation (TSE:8283) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of December to ¥57.00. This makes the dividend yield 2.6%, which is above the industry average.
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Paltac's Future Dividend Projections Appear Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Paltac's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 3.8% over the next year. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for Paltac
Paltac Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from ¥78.00 total annually to ¥120.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 2.6% per annum over the last five years, which admittedly is a bit slow. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
In Summary
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Paltac analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
