Here's What We Like About Mirai IndustryLtd's (TSE:7931) Upcoming Dividend

Mirai Industry Co.,Ltd. (TSE:7931) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Thus, you can purchase Mirai IndustryLtd's shares before the 19th of September in order to receive the dividend, which the company will pay on the 27th of November.

The company's next dividend payment will be JP¥50.00 per share. Last year, in total, the company distributed JP¥130 to shareholders. Calculating the last year's worth of payments shows that Mirai IndustryLtd has a trailing yield of 3.9% on the current share price of JP¥3315.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Mirai IndustryLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Mirai IndustryLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Mirai IndustryLtd paid out a comfortable 48% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 75% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Mirai IndustryLtd's earnings per share have risen 13% per annum over the last five years. Mirai IndustryLtd has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Mirai IndustryLtd has increased its dividend at approximately 15% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Should investors buy Mirai IndustryLtd for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Mirai IndustryLtd paid out less than half its earnings and a bit over half its free cash flow. Mirai IndustryLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Mirai IndustryLtd is facing. Be aware that Mirai IndustryLtd is showing 2 warning signs in our investment analysis, and 1 of those is 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.