Income Investors Should Know That Teikoku Electric Mfg.Co.,Ltd. (TSE:6333) Goes Ex-Dividend Soon

It looks like Teikoku Electric Mfg.Co.,Ltd. (TSE:6333) is about to go ex-dividend in the next 4 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. 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. Accordingly, Teikoku Electric Mfg.Co.Ltd investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 27th of June.

The company's next dividend payment will be JP¥55.00 per share, on the back of last year when the company paid a total of JP¥96.00 to shareholders. Calculating the last year's worth of payments shows that Teikoku Electric Mfg.Co.Ltd has a trailing yield of 3.2% on the current share price of JP¥3025.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Teikoku Electric Mfg.Co.Ltd is paying out an acceptable 55% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Teikoku Electric Mfg.Co.Ltd generated enough free cash flow to afford its dividend. It paid out 77% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Teikoku Electric Mfg.Co.Ltd'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.

Check out our latest analysis for Teikoku Electric Mfg.Co.Ltd

Click here to see how much of its profit Teikoku Electric Mfg.Co.Ltd paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Teikoku Electric Mfg.Co.Ltd has grown its earnings rapidly, up 26% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Teikoku Electric Mfg.Co.Ltd has delivered an average of 23% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is Teikoku Electric Mfg.Co.Ltd an attractive dividend stock, or better left on the shelf? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. However, we'd also note that Teikoku Electric Mfg.Co.Ltd is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Teikoku Electric Mfg.Co.Ltd's dividend merits.

In light of that, while Teikoku Electric Mfg.Co.Ltd has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 2 warning signs for Teikoku Electric Mfg.Co.Ltd that we recommend you consider before investing in the business.

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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.