Is It Smart To Buy JAPAN POST BANK Co., Ltd. (TSE:7182) Before It Goes Ex-Dividend?

JAPAN POST BANK Co., Ltd. (TSE:7182) stock is about to trade ex-dividend in two days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a 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, JAPAN POST BANK investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 19th of June.

The company's next dividend payment will be JP¥56.00 per share, on the back of last year when the company paid a total of JP¥56.00 to shareholders. Last year's total dividend payments show that JAPAN POST BANK has a trailing yield of 3.5% on the current share price of JP¥1601.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether JAPAN POST BANK can afford its dividend, and if the dividend could grow.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. JAPAN POST BANK paid out a comfortable 46% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Check out our latest analysis for JAPAN POST BANK

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see JAPAN POST BANK earnings per share are up 9.3% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past nine years, JAPAN POST BANK has increased its dividend at approximately 9.4% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Should investors buy JAPAN POST BANK for the upcoming dividend? JAPAN POST BANK has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, JAPAN POST BANK looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in JAPAN POST BANK for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for JAPAN POST BANK and you should be aware of it before buying any shares.

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.