Nippon Telegraph and Telephone's (TSE:9432) Dividend Will Be ¥2.60

Nippon Telegraph and Telephone Corporation's (TSE:9432) investors are due to receive a payment of ¥2.60 per share on 18th of December. This makes the dividend yield 3.3%, which is above the industry average.

See our latest analysis for Nippon Telegraph and Telephone

Nippon Telegraph and Telephone's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Nippon Telegraph and Telephone was paying only paying out a fraction of earnings, but the payment was a massive 151% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to expand by 3.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

Nippon Telegraph and Telephone Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from ¥1.60 total annually to ¥5.20. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Nippon Telegraph and Telephone has grown earnings per share at 12% per year over the past five years. Nippon Telegraph and Telephone definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Nippon Telegraph and Telephone's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Nippon Telegraph and Telephone's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 2 warning signs for Nippon Telegraph and Telephone that you should be aware of before investing. Is Nippon Telegraph and Telephone 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.

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