Income Investors Should Know That Sankyo Tateyama,Inc. (TSE:5932) Goes Ex-Dividend Soon

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 Sankyo Tateyama,Inc. (TSE:5932) is about to go ex-dividend in just 3 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Sankyo TateyamaInc's shares on or after the 29th of May, you won't be eligible to receive the dividend, when it is paid on the 29th of August.

The company's next dividend payment will be JP¥12.50 per share, and in the last 12 months, the company paid a total of JP¥25.00 per share. Calculating the last year's worth of payments shows that Sankyo TateyamaInc has a trailing yield of 4.0% on the current share price of JP¥628.00. If you buy this business for its dividend, you should have an idea of whether Sankyo TateyamaInc's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Sankyo TateyamaInc lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If Sankyo TateyamaInc didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Fortunately, it paid out only 39% of its free cash flow in the past year.

Check out our latest analysis for Sankyo TateyamaInc

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. Sankyo TateyamaInc was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sankyo TateyamaInc has seen its dividend decline 3.3% per annum on average over the past 10 years, which is not great to see.

Get our latest analysis on Sankyo TateyamaInc's balance sheet health here.

The Bottom Line

Has Sankyo TateyamaInc got what it takes to maintain its dividend payments? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." In summary, it's hard to get excited about Sankyo TateyamaInc from a dividend perspective.

If you're not too concerned about Sankyo TateyamaInc's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For instance, we've identified 2 warning signs for Sankyo TateyamaInc (1 is a bit concerning) you should be aware of.

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.