It Might Not Be A Great Idea To Buy Serverworks Co.,Ltd. (TSE:4434) For Its Next Dividend
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 Serverworks Co.,Ltd. (TSE:4434) is about to go ex-dividend in just 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. 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. Meaning, you will need to purchase ServerworksLtd's shares before the 28th of August to receive the dividend, which will be paid on the .
The company's next dividend payment will be JP¥15.00 per share, on the back of last year when the company paid a total of JP¥30.00 to shareholders. Calculating the last year's worth of payments shows that ServerworksLtd has a trailing yield of 1.2% on the current share price of JP¥2446.00. If you buy this business for its dividend, you should have an idea of whether ServerworksLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's 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. ServerworksLtd reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.
See our latest analysis for ServerworksLtd
Click here to see how much of its profit ServerworksLtd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. ServerworksLtd reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Unfortunately ServerworksLtd has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Get our latest analysis on ServerworksLtd's balance sheet health here.
To Sum It Up
Should investors buy ServerworksLtd for the upcoming dividend? All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
With that in mind though, if the poor dividend characteristics of ServerworksLtd don't faze you, it's worth being mindful of the risks involved with this business. To help with this, we've discovered 1 warning sign for ServerworksLtd that you should be aware of before investing in their shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.