Teikoku Tsushin Kogyo (TSE:6763) Has Announced A Dividend Of ¥50.00

Teikoku Tsushin Kogyo Co., Ltd. (TSE:6763) will pay a dividend of ¥50.00 on the 30th of June. This makes the dividend yield 3.0%, which is above the industry average.

Check out our latest analysis for Teikoku Tsushin Kogyo

Teikoku Tsushin Kogyo's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Teikoku Tsushin Kogyo was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Over the next year, EPS could expand by 22.5% if recent trends continue. If the dividend continues on this path, the payout ratio could be 73% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was ¥25.00, compared to the most recent full-year payment of ¥70.00. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Teikoku Tsushin Kogyo has been growing its earnings per share at 23% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Teikoku Tsushin Kogyo could prove to be a strong dividend payer.

Our Thoughts On Teikoku Tsushin Kogyo's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Teikoku Tsushin Kogyo is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Teikoku Tsushin Kogyo 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 picked out 1 warning sign for Teikoku Tsushin Kogyo that investors should know about before committing capital to this stock. Is Teikoku Tsushin Kogyo 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.