Noritsu Koki Co., Ltd. (TSE:7744) Stock Goes Ex-Dividend In Just Three Days

It looks like Noritsu Koki Co., Ltd. (TSE:7744) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Noritsu Koki's shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 4th of September.

The company's upcoming dividend is JP¥58.00 a share, following on from the last 12 months, when the company distributed a total of JP¥116 per share to shareholders. Based on the last year's worth of payments, Noritsu Koki stock has a trailing yield of around 2.7% on the current share price of JP¥4285.00. If you buy this business for its dividend, you should have an idea of whether Noritsu Koki's dividend is reliable and sustainable. So we need to investigate whether Noritsu Koki can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Noritsu Koki

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Noritsu Koki paid out a comfortable 29% of its profit last year. A useful secondary check can be to evaluate whether Noritsu Koki generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Noritsu Koki'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?

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. Fortunately for readers, Noritsu Koki's earnings per share have been growing at 11% a year for the past five years. It paid out more than three-quarters of its earnings in the last year, even though earnings per share are growing rapidly. Higher earnings generally bode well for growing dividends, although with seemingly strong growth prospects we'd wonder why management are not reinvesting more in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Noritsu Koki has delivered an average of 31% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has Noritsu Koki got what it takes to maintain its dividend payments? Earnings per share have grown at a nice rate in recent times and over the last year, Noritsu Koki paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about Noritsu Koki, and we would prioritise taking a closer look at it.

So while Noritsu Koki looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To that end, you should learn about the 3 warning signs we've spotted with Noritsu Koki (including 2 which are potentially serious).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com