Is It Smart To Buy UT Group Co.,Ltd. (TSE:2146) Before It Goes Ex-Dividend?

It looks like UT Group Co.,Ltd. (TSE:2146) is about to go ex-dividend in the next three 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 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 UT GroupLtd's shares before the 28th of March in order to be eligible for the dividend, which will be paid on the 24th of June.

The company's upcoming dividend is JP¥51.35 a share, following on from the last 12 months, when the company distributed a total of JP¥103 per share to shareholders. Looking at the last 12 months of distributions, UT GroupLtd has a trailing yield of approximately 4.6% on its current stock price of JP¥2254.00. If you buy this business for its dividend, you should have an idea of whether UT GroupLtd'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.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. UT GroupLtd paid out more than half (70%) of its earnings last year, which is a regular payout ratio for most companies.

View our latest analysis for UT GroupLtd

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, UT GroupLtd's earnings per share have been growing at 13% a year for the past five years. UT GroupLtd 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. UT GroupLtd has delivered 22% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Should investors buy UT GroupLtd for the upcoming dividend? Earnings per share are growing at an attractive rate, and UT GroupLtd is paying out a bit over half its profits. UT GroupLtd ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in UT GroupLtd for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 3 warning signs we've spotted with UT GroupLtd (including 1 which is significant).

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.