An In-depth Analysis of the Company's Dividend Performance and Sustainability
Nippon Telegraph & Telephone Corp (NPPXF, Financial) recently announced a dividend of $2.5 per share, payable on an undisclosed date, with the ex-dividend date set for 2023-09-28. As investors eagerly anticipate this upcoming payment, it's crucial to evaluate the company's dividend history, yield, and growth rates. Using the data from GuruFocus, this article delves into Nippon Telegraph & Telephone Corp's dividend performance and assesses its sustainability.
Overview of Nippon Telegraph & Telephone Corp
NTT owns NTT DoCoMo, the largest wireless operator in Japan, with 87.5 million subscribers. It also owns NTT East and NTT West, the two regional incumbent fixed-line operators in Japan, with about 12.1 million traditional fixed-line and 23.5 million broadband lines (around 72% of which are wholesaled). The firm also provides IT and communications systems integration via NTT Communications and 52.4%-owned NTT Data.
A Look into Nippon Telegraph & Telephone Corp's Dividend History
Nippon Telegraph & Telephone Corp has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dissecting Nippon Telegraph & Telephone Corp's Dividend Yield and Growth
As of today, Nippon Telegraph & Telephone Corp currently has a 12-month trailing dividend yield of 2.90% and a 12-month forward dividend yield of 3.14%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Nippon Telegraph & Telephone Corp's annual dividend growth rate was 8.10%. Extended to a five-year horizon, this rate increased to 9.40% per year. Over the past decade, Nippon Telegraph & Telephone Corp's annual dividends per share growth rate stands at an impressive 12.90%.
Based on Nippon Telegraph & Telephone Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Nippon Telegraph & Telephone Corp stock as of today is approximately 4.54%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Nippon Telegraph & Telephone Corp's dividend payout ratio is 0.34.
Nippon Telegraph & Telephone Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nippon Telegraph & Telephone Corp's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Nippon Telegraph & Telephone Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Nippon Telegraph & Telephone Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nippon Telegraph & Telephone Corp's revenue has increased by approximately 5.40% per year on average, a rate that outperforms than approximately 58.47% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Nippon Telegraph & Telephone Corp's earnings increased by approximately 14.60% per year on average, a rate that outperforms than approximately 63.58% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.40%, which outperforms than approximately 58.77% of global competitors.
Conclusion
With a consistent dividend payment history, a promising growth rate, and robust profitability, Nippon Telegraph & Telephone Corp presents a compelling case for dividend investors. The company's impressive growth metrics further strengthen its position, making it a potentially lucrative investment opportunity. However, like any investment, it's crucial to conduct thorough research and consider the company's overall financial health before making a decision.
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