Prestige International's (TSE:4290) Dividend Will Be ¥13.00
The board of Prestige International Inc. (TSE:4290) has announced that it will pay a dividend of ¥13.00 per share on the 10th of June. This will take the dividend yield to an attractive 3.5%, providing a nice boost to shareholder returns.
Prestige International's Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Prestige International's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
The next year is set to see EPS grow by 9.0%. If the dividend continues on this path, the payout ratio could be 67% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for Prestige International
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ¥2.50 in 2016, and the most recent fiscal year payment was ¥26.00. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
Prestige International Could Grow Its Dividend
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Prestige International has impressed us by growing EPS at 9.6% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like Prestige International's Dividend
Overall, a dividend increase is always good, and we think that Prestige International is a strong income stock thanks to its track record and growing earnings. 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Prestige International that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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