Here's What We Like About PIXTA's (TSE:3416) Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see PIXTA Inc. (TSE:3416) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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 PIXTA's shares on or after the 29th of December will not receive the dividend, which will be paid on the 27th of March.

The company's upcoming dividend is JP¥45.00 a share, following on from the last 12 months, when the company distributed a total of JP¥45.00 per share to shareholders. Looking at the last 12 months of distributions, PIXTA has a trailing yield of approximately 4.4% on its current stock price of JP¥1022.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether PIXTA has been able to grow its dividends, or if the dividend might be cut.

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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. PIXTA paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

Check out our latest analysis for PIXTA

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, PIXTA's earnings per share have been growing at 15% a year for the past five years. PIXTA has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Unfortunately PIXTA has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is PIXTA worth buying for its dividend? PIXTA has an acceptable payout ratio and its earnings per share have been improving at a decent rate. In summary, PIXTA appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while PIXTA has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 2 warning signs for PIXTA that we recommend you consider before investing in the business.

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.