Ubicom Holdings' (TSE:3937) Dividend Will Be Increased To ¥40.00

Ubicom Holdings, Inc. (TSE:3937) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of June to ¥40.00. This takes the dividend yield to 1.8%, which shareholders will be pleased with.

View our latest analysis for Ubicom Holdings

Ubicom Holdings' Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Ubicom Holdings' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 30.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 67%, which is in the range that makes us comfortable with the sustainability of the dividend.

Ubicom Holdings Doesn't Have A Long Payment History

Ubicom Holdings' 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. Since 2018, the dividend has gone from ¥5.00 total annually to ¥25.00. This implies that the company grew its distributions at a yearly rate of about 31% over that duration. Ubicom Holdings 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.

Ubicom Holdings Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Ubicom Holdings has impressed us by growing EPS at 9.6% per year over the past five years. Ubicom Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Ubicom Holdings Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Ubicom Holdings that you should be aware of before investing. Is Ubicom Holdings 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.