Houlihan Lokey (NYSE:HLI) Will Pay A Larger Dividend Than Last Year At $0.55
Houlihan Lokey, Inc.'s (NYSE:HLI) dividend will be increasing from last year's payment of the same period to $0.55 on 15th of September. This takes the annual payment to 2.2% of the current stock price, which is about average for the industry.
See our latest analysis for Houlihan Lokey
Houlihan Lokey's Earnings Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Houlihan Lokey was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 54.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.
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 annual payment during the last 8 years was $0.60 in 2015, and the most recent fiscal year payment was $2.20. This means that it has been growing its distributions at 18% per annum over that time. 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.
We Could See Houlihan Lokey's Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Houlihan Lokey has been growing its earnings per share at 6.3% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
Our Thoughts On Houlihan Lokey's Dividend
Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Houlihan Lokey that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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