There's A Lot To Like About Nissan Shatai's (TSE:7222) Upcoming JP¥6.50 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Nissan Shatai Co., Ltd. (TSE:7222) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Nissan Shatai investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 1st of December.
The company's next dividend payment will be JP¥6.50 per share. Last year, in total, the company distributed JP¥18.00 to shareholders. Based on the last year's worth of payments, Nissan Shatai has a trailing yield of 1.9% on the current stock price of JP¥930.00. If you buy this business for its dividend, you should have an idea of whether Nissan Shatai's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Nissan Shatai is paying out just 23% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Nissan Shatai generated enough free cash flow to afford its dividend. The good news is it paid out just 15% of its free cash flow in the last year.
It's positive to see that Nissan Shatai's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
See our latest analysis for Nissan Shatai
Click here to see how much of its profit Nissan Shatai paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Nissan Shatai's earnings have been skyrocketing, up 36% per annum for the past five years. Nissan Shatai earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Nissan Shatai has delivered 7.2% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Nissan Shatai an attractive dividend stock, or better left on the shelf? Nissan Shatai has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. There's a lot to like about Nissan Shatai, and we would prioritise taking a closer look at it.
On that note, you'll want to research what risks Nissan Shatai is facing. For example, we've found 1 warning sign for Nissan Shatai that we recommend you consider before investing in the business.
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.