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华尔街日报Interested In Kyowa Electronic Instruments' (TSE:6853) Upcoming JP¥10.00 Dividend? You Have Four Days Left
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 Kyowa Electronic Instruments Co., Ltd. (TSE:6853) is about to go ex-dividend in just 4 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. 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. Thus, you can purchase Kyowa Electronic Instruments' shares before the 29th of December in order to receive the dividend, which the company will pay on the 30th of March.
The company's next dividend payment will be JP¥10.00 per share, and in the last 12 months, the company paid a total of JP¥20.00 per share. Based on the last year's worth of payments, Kyowa Electronic Instruments stock has a trailing yield of around 2.6% on the current share price of JP¥758.00. If you buy this business for its dividend, you should have an idea of whether Kyowa Electronic Instruments's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Fortunately Kyowa Electronic Instruments's payout ratio is modest, at just 49% of profit. A useful secondary check can be to evaluate whether Kyowa Electronic Instruments generated enough free cash flow to afford its dividend. The company paid out 97% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.
While Kyowa Electronic Instruments's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Kyowa Electronic Instruments's ability to maintain its dividend.
View our latest analysis for Kyowa Electronic Instruments
Click here to see how much of its profit Kyowa Electronic Instruments paid out over the last 12 months.
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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Kyowa Electronic Instruments earnings per share are up 4.4% per annum over the last five years. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Kyowa Electronic Instruments has delivered 7.2% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
From a dividend perspective, should investors buy or avoid Kyowa Electronic Instruments? Kyowa Electronic Instruments delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 97% of its cash flow over the last year, which is a mediocre outcome. In summary, it's hard to get excited about Kyowa Electronic Instruments from a dividend perspective.
However if you're still interested in Kyowa Electronic Instruments as a potential investment, you should definitely consider some of the risks involved with Kyowa Electronic Instruments. Case in point: We've spotted 1 warning sign for Kyowa Electronic Instruments you should be aware of.
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.