OSAKA Titanium technologiesLtd (TSE:5726) Is Reducing Its Dividend To ¥20.00

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. This means that the annual payment is 2.4% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for OSAKA Titanium technologiesLtd

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

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. OSAKA Titanium technologiesLtd is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to rise by 14.5% over the next year. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

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. OSAKA Titanium technologiesLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

OSAKA Titanium technologiesLtd Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. OSAKA Titanium technologiesLtd has impressed us by growing EPS at 5.6% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On OSAKA Titanium technologiesLtd's Dividend

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While OSAKA Titanium technologiesLtd is earning enough to cover the payments, the cash flows are lacking. We don't think OSAKA Titanium technologiesLtd is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for OSAKA Titanium technologiesLtd (1 is a bit concerning!) 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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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.