Why You Might Be Interested In Marubeni Construction Material Lease Co.,Ltd. (TSE:9763) For Its Upcoming Dividend

Marubeni Construction Material Lease Co.,Ltd. (TSE:9763) stock is about to trade ex-dividend in three days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. This means that investors who purchase Marubeni Construction Material LeaseLtd's shares on or after the 28th of March will not receive the dividend, which will be paid on the 30th of May.

The company's next dividend payment will be JP¥65.00 per share, on the back of last year when the company paid a total of JP¥130 to shareholders. Calculating the last year's worth of payments shows that Marubeni Construction Material LeaseLtd has a trailing yield of 4.3% on the current share price of JP¥3045.00. If you buy this business for its dividend, you should have an idea of whether Marubeni Construction Material LeaseLtd's dividend is reliable and sustainable. As a result, readers should always check whether Marubeni Construction Material LeaseLtd has been able to grow its dividends, or if the dividend might be cut.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Marubeni Construction Material LeaseLtd paid out a comfortable 33% of its profit last year. 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. Fortunately, it paid out only 34% of its free cash flow in the past year.

It's positive to see that Marubeni Construction Material LeaseLtd'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.

View our latest analysis for Marubeni Construction Material LeaseLtd

Click here to see how much of its profit Marubeni Construction Material LeaseLtd 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Marubeni Construction Material LeaseLtd, with earnings per share up 5.5% on average over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Marubeni Construction Material LeaseLtd has delivered 13% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Has Marubeni Construction Material LeaseLtd got what it takes to maintain its dividend payments? Earnings per share growth has been growing somewhat, and Marubeni Construction Material LeaseLtd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Marubeni Construction Material LeaseLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about Marubeni Construction Material LeaseLtd, and we would prioritise taking a closer look at it.

So while Marubeni Construction Material LeaseLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for Marubeni Construction Material LeaseLtd you should know about.

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.