The board of Sumitomo Osaka Cement Co., Ltd. (TSE:5232) has announced that it will pay a dividend of ¥60.00 per share on the 2nd of December. This makes the dividend yield 3.0%, which will augment investor returns quite nicely.
Check out our latest analysis for Sumitomo Osaka Cement
Sumitomo Osaka Cement's Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Sumitomo Osaka Cement'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 17.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the annual payment back then was ¥50.00, compared to the most recent full-year payment of ¥120.00. This means that it has been growing its distributions at 9.1% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Sumitomo Osaka Cement has been growing its earnings per share at 10% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Sumitomo Osaka Cement's prospects of growing its dividend payments in the future.
We Really Like Sumitomo Osaka Cement's Dividend
Overall, we like to see the dividend staying consistent, and we think Sumitomo Osaka Cement might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Sumitomo Osaka Cement that investors should take into consideration. 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.
About TSE:5232
Sumitomo Osaka Cement
Engages in the cement production business in Japan and internationally.
Excellent balance sheet average dividend payer.
