Regular readers will know we love our dividends at Simply Wall St, which is why it’s exciting to see One Software Technologies Ltd (TLV: ONE) is set to trade ex-dividend within the next three days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. As a result, investors in One Software Technologies who buy the shares on or after December 1 will not receive the dividend, which will be paid on December 15.
The company’s next dividend payment will be 0.28 yen per share, compared to last year when the company paid a total of 0.89 yen to shareholders. Calculating the value of last year’s payouts shows One Software Technologies has a 1.7% return on the current share price of 53.73. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
See our latest review for One Software Technologies
Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. One Software Technologies pays an acceptable level of 51% of its profits, a payment level common to most companies. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Fortunately, he has only paid out 31% of his free cash flow in the past year.
It is positive to see that One Software Technologies’ dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher. margin of safety before the dividend is cut.
Click here to see how much of its Profit One Software Technologies has paid in the past 12 months.
Have profits and dividends increased?
Companies with consistently increasing earnings per share usually make the best dividend-paying stocks because they generally find it easier to increase dividends per share. If business goes into recession and the dividend is reduced, the business could experience a sharp drop in value. For this reason, we are pleased to see that One Software Technologies’ earnings per share have grown 12% per year over the past five years. One Software Technologies pays out just over half of its profits, which suggests the company is striking a balance between reinvesting in growth and paying dividends. This is a reasonable combination that could portend further dividend increases in the future.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. One Software Technologies has generated an average annual increase of 15% per year in its dividend, based on dividend payments over the past 10 years. It is exciting to see that earnings and dividends per share have grown rapidly over the past few years.
The bottom line
Is One Software Technologies an attractive dividend-paying stock, or better still, is it left on the shelf? We like the growing earnings per share of One Software Technologies and the fact that while its payout ratio is average, it paid out a lower percentage of its cash flow. Overall, we think this is an attractive combination worthy of further research.
Want to know more about the dividend performance of One Software Technologies? Check out this visualization of its historic revenue and profit growth.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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