NTT System (WSE:NTT) Could Be A Buy For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see NTT System S.A. (WSE:NTT) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase NTT System's shares before the 26th of September in order to be eligible for the dividend, which will be paid on the 18th of October.

The upcoming dividend for NTT System is zł0.07 per share, increased from last year's total dividends per share of zł0.03. If you buy this business for its dividend, you should have an idea of whether NTT System's dividend is reliable and sustainable. As a result, readers should always check whether NTT System has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for NTT System

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. NTT System has a low and conservative payout ratio of just 2.4% of its income after tax.

Click here to see how much of its profit NTT System paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see NTT System has grown its earnings rapidly, up 39% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. NTT System has seen its dividend decline 5.2% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is NTT System worth buying for its dividend? NTT System has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. NTT System looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in NTT System for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for NTT System that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.