Be Sure To Check Out DM Solutions Co.,Ltd (TSE:6549) Before It Goes Ex-Dividend

DM Solutions Co.,Ltd (TSE:6549) is about to trade ex-dividend in the next four 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. Accordingly, DM SolutionsLtd investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 10th of December.

The company's next dividend payment will be JP¥10.50 per share. Last year, in total, the company distributed JP¥21.00 to shareholders. Looking at the last 12 months of distributions, DM SolutionsLtd has a trailing yield of approximately 1.9% on its current stock price of JP¥1107.00. If you buy this business for its dividend, you should have an idea of whether DM SolutionsLtd's dividend is reliable and sustainable. So we need to investigate whether DM SolutionsLtd can afford its dividend, and if the dividend could grow.

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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. DM SolutionsLtd has a low and conservative payout ratio of just 11% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 16% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that DM SolutionsLtd'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.

View our latest analysis for DM SolutionsLtd

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see DM SolutionsLtd's earnings have been skyrocketing, up 172% per annum for the past five years. DM SolutionsLtd looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last two years, DM SolutionsLtd has lifted its dividend by approximately 67% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is DM SolutionsLtd worth buying for its dividend? We love that DM SolutionsLtd is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks DM SolutionsLtd is facing. In terms of investment risks, we've identified 2 warning signs with DM SolutionsLtd and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.