Only Three Days Left To Cash In On Cross Plus' (TSE:3320) Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Cross Plus Inc. (TSE:3320) is about to go ex-dividend in just three days. The ex-dividend date is commonly two business days 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. Thus, you can purchase Cross Plus' shares before the 30th of July in order to receive the dividend, which the company will pay on the 27th of October.

The company's next dividend payment will be JP¥30.00 per share. Last year, in total, the company distributed JP¥60.00 to shareholders. Last year's total dividend payments show that Cross Plus has a trailing yield of 4.6% on the current share price of JP¥1318.00. If you buy this business for its dividend, you should have an idea of whether Cross Plus's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Cross Plus paid out a comfortable 28% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (53%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Cross Plus's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Check out our latest analysis for Cross Plus

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Cross Plus's earnings per share have fallen at approximately 8.2% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Cross Plus has delivered 35% dividend growth per year on average over the past nine years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Cross Plus? Earnings per share have fallen significantly, although at least Cross Plus paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. To summarise, Cross Plus looks okay on this analysis, although it doesn't appear a stand-out opportunity.

However if you're still interested in Cross Plus as a potential investment, you should definitely consider some of the risks involved with Cross Plus. Our analysis shows 3 warning signs for Cross Plus and you should be aware of these before buying any shares.

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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.