Okinawa Cellular Telephone's (TSE:9436) Dividend Will Be ¥60.00

The board of Okinawa Cellular Telephone Company (TSE:9436) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥60.00 per share. The payment will take the dividend yield to 2.8%, which is in line with the average for the industry.

See our latest analysis for Okinawa Cellular Telephone

Okinawa Cellular Telephone's Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last payment was quite easily covered by earnings, but it made up 329% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Over the next year, EPS is forecast to expand by 4.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 50% by next year, which is in a pretty sustainable range.

Okinawa Cellular Telephone Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥39.50 in 2014 to the most recent total annual payment of ¥120.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Okinawa Cellular Telephone's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Okinawa Cellular Telephone has seen EPS rising for the last five years, at 8.1% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Okinawa Cellular Telephone that investors should take into consideration. 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.

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