Yahoo Finance Houlihan Lokey's (NYSE:HLI) Upcoming Dividend Will Be Larger Than Last Year's
Houlihan Lokey, Inc. (NYSE:HLI) will increase its dividend from last year's comparable payment on the 15th of June to $0.57. Despite this raise, the dividend yield of 1.7% is only a modest boost to shareholder returns.
See our latest analysis for Houlihan Lokey
Houlihan Lokey's Dividend Is Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Houlihan Lokey was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 49.2% over the next year. 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.
Houlihan Lokey Doesn't Have A Long Payment History
Houlihan Lokey'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 dividend has gone from an annual total of $0.60 in 2015 to the most recent total annual payment of $2.28. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Houlihan Lokey 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 Has Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Houlihan Lokey has impressed us by growing EPS at 9.8% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
Houlihan Lokey Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend 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 Houlihan Lokey that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
