Is It Smart To Buy Heiwa Real Estate Co., Ltd. (TSE:8803) Before It Goes Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Heiwa Real Estate Co., Ltd. (TSE:8803) is about to trade ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Therefore, if you purchase Heiwa Real Estate's shares on or after the 29th of September, you won't be eligible to receive the dividend, when it is paid on the 1st of December.

The company's next dividend payment will be JP¥44.00 per share, on the back of last year when the company paid a total of JP¥103 to shareholders. Based on the last year's worth of payments, Heiwa Real Estate has a trailing yield of 4.3% on the current stock price of JP¥2370.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Heiwa Real Estate paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies.

Check out our latest analysis for Heiwa Real Estate

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Heiwa Real Estate's earnings per share have risen 11% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Heiwa Real Estate has delivered 25% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

From a dividend perspective, should investors buy or avoid Heiwa Real Estate? Heiwa Real Estate has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Overall, Heiwa Real Estate looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while Heiwa Real Estate looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for Heiwa Real Estate (1 is a bit concerning!) that deserve your attention before investing in the shares.

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.