Three Days Left To Buy Di-Nikko Engineering Co., Ltd. (TSE:6635) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Di-Nikko Engineering Co., Ltd. (TSE:6635) is about to trade ex-dividend in the next 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Di-Nikko Engineering's shares on or after the 29th of December will not receive the dividend, which will be paid on the 30th of March.

The company's next dividend payment will be JP¥8.00 per share. Last year, in total, the company distributed JP¥16.00 to shareholders. Looking at the last 12 months of distributions, Di-Nikko Engineering has a trailing yield of approximately 3.2% on its current stock price of JP¥500.00. If you buy this business for its dividend, you should have an idea of whether Di-Nikko Engineering's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Di-Nikko Engineering paying out a modest 43% of its earnings. 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. The good news is it paid out just 4.4% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for Di-Nikko Engineering

Click here to see how much of its profit Di-Nikko Engineering paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Di-Nikko Engineering's earnings per share have dropped 14% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Di-Nikko Engineering has delivered 4.8% dividend growth per year on average over the past 10 years.

Final Takeaway

Has Di-Nikko Engineering got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall, it's hard to get excited about Di-Nikko Engineering from a dividend perspective.

In light of that, while Di-Nikko Engineering has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 5 warning signs for Di-Nikko Engineering that we strongly recommend you have a look at before investing in the company.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.