NOK's (TSE:7240) Dividend Will Be ¥55.00
NOK Corporation (TSE:7240) will pay a dividend of ¥55.00 per share on December 3, representing a 4.2% annual yield. The company's earnings cover the dividend, with projected EPS growth of 5.8% next year, leading to a sustainable payout ratio of 63%. Despite a history of dividend cuts, NOK has shown strong EPS growth of 38% over the past five years, indicating potential for future dividend increases. Investors should consider other factors alongside dividends, as there is one warning sign to note before investing.
The board of NOK Corporation (TSE:7240) has announced that it will pay a dividend on the 3rd of December, with investors receiving ¥55.00 per share. This will take the annual payment to 4.2% of the stock price, which is above what most companies in the industry pay.
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NOK's Projected Earnings Seem Likely To Cover Future Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by NOK's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 5.8%. If the dividend continues on this path, the payout ratio could be 63% by next year, which we think can be pretty sustainable going forward.
View our latest analysis for NOK
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was ¥50.00, compared to the most recent full-year payment of ¥110.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.2% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. NOK might have put its house in order since then, but we remain cautious.
The Dividend Looks Likely To Grow
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. NOK has impressed us by growing EPS at 38% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
We Really Like NOK's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for NOK that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
