Nihonwasou Holdings, Inc. (TSE:2499) Goes Ex-Dividend Soon

Nihonwasou Holdings, Inc. (TSE:2499) stock is about to trade ex-dividend in 3 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Nihonwasou Holdings' shares before the 29th of December in order to receive the dividend, which the company will pay on the 13th of March.

The company's next dividend payment will be JP¥7.00 per share, on the back of last year when the company paid a total of JP¥14.00 to shareholders. Calculating the last year's worth of payments shows that Nihonwasou Holdings has a trailing yield of 3.9% on the current share price of JP¥362.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is 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. Nihonwasou Holdings has a low and conservative payout ratio of just 19% of its income after tax. A useful secondary check can be to evaluate whether Nihonwasou Holdings generated enough free cash flow to afford its dividend. Fortunately, it paid out only 36% of its free cash flow in the past 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 Nihonwasou Holdings

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Nihonwasou Holdings's earnings per share have fallen at approximately 8.1% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Nihonwasou Holdings has lifted its dividend by approximately 8.8% a year on average.

Final Takeaway

Should investors buy Nihonwasou Holdings for the upcoming dividend? Nihonwasou Holdings has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. All things considered, we are not particularly enthused about Nihonwasou Holdings from a dividend perspective.

So while Nihonwasou Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For instance, we've identified 3 warning signs for Nihonwasou Holdings (1 doesn't sit too well with us) 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.