Here's What We Like About SHO-BOND HoldingsLtd's (TSE:1414) Upcoming Dividend

It looks like SHO-BOND Holdings Co.,Ltd. (TSE:1414) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase SHO-BOND HoldingsLtd's shares before the 27th of December to receive the dividend, which will be paid on the 10th of March.

The company's next dividend payment will be JP¥64.00 per share, on the back of last year when the company paid a total of JP¥142 to shareholders. Last year's total dividend payments show that SHO-BOND HoldingsLtd has a trailing yield of 2.7% on the current share price of JP¥5245.00. If you buy this business for its dividend, you should have an idea of whether SHO-BOND HoldingsLtd's dividend is reliable and sustainable. As a result, readers should always check whether SHO-BOND HoldingsLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for SHO-BOND HoldingsLtd

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. SHO-BOND HoldingsLtd is paying out an acceptable 51% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that SHO-BOND HoldingsLtd'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.

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

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 fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see SHO-BOND HoldingsLtd's earnings per share have risen 13% per annum over the last five years. SHO-BOND HoldingsLtd is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

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, SHO-BOND HoldingsLtd has lifted its dividend by approximately 17% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Has SHO-BOND HoldingsLtd got what it takes to maintain its dividend payments? SHO-BOND HoldingsLtd's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

Wondering what the future holds for SHO-BOND HoldingsLtd? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.