OSAKA Titanium technologiesLtd (TSE:5726) Is Paying Out Less In Dividends Than Last Year

OSAKA Titanium technologies Co.,Ltd. (TSE:5726) is reducing its dividend from last year's comparable payment to ¥20.00 on the 4th of June. Based on this payment, the dividend yield will be 2.6%, which is lower than the average for the industry.

View our latest analysis for OSAKA Titanium technologiesLtd

OSAKA Titanium technologiesLtd's Projected Earnings Seem Likely To Cover Future Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, OSAKA Titanium technologiesLtd's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share is forecast to rise by 15.6% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, which is in the range that makes us comfortable with the sustainability of the dividend.

OSAKA Titanium technologiesLtd's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2023, the dividend has gone from ¥20.00 total annually to ¥45.00. This implies that the company grew its distributions at a yearly rate of about 50% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

We Could See OSAKA Titanium technologiesLtd's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that OSAKA Titanium technologiesLtd has been growing its earnings per share at 5.6% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While OSAKA Titanium technologiesLtd is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for OSAKA Titanium technologiesLtd (of which 1 is potentially serious!) you should know about. Is OSAKA Titanium technologiesLtd 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.