Why You Might Be Interested In NIPPON PARKING DEVELOPMENT Co.,Ltd. (TSE:2353) For Its Upcoming Dividend

Readers hoping to buy NIPPON PARKING DEVELOPMENT Co.,Ltd. (TSE:2353) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase NIPPON PARKING DEVELOPMENTLtd's shares before the 30th of July to receive the dividend, which will be paid on the 27th of October.

The company's upcoming dividend is JP¥8.00 a share, following on from the last 12 months, when the company distributed a total of JP¥8.00 per share to shareholders. Based on the last year's worth of payments, NIPPON PARKING DEVELOPMENTLtd has a trailing yield of 3.0% on the current stock price of JP¥269.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. NIPPON PARKING DEVELOPMENTLtd 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. It paid out more than half (73%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that NIPPON PARKING DEVELOPMENTLtd'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.

See our latest analysis for NIPPON PARKING DEVELOPMENTLtd

Click here to see how much of its profit NIPPON PARKING DEVELOPMENTLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 NIPPON PARKING DEVELOPMENTLtd's earnings per share have risen 15% per annum over the last five years. NIPPON PARKING DEVELOPMENTLtd has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. NIPPON PARKING DEVELOPMENTLtd has delivered an average of 10% 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.

Final Takeaway

Is NIPPON PARKING DEVELOPMENTLtd an attractive dividend stock, or better left on the shelf? Earnings per share have grown at a nice rate in recent times and over the last year, NIPPON PARKING DEVELOPMENTLtd paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about NIPPON PARKING DEVELOPMENTLtd, and we would prioritise taking a closer look at it.

So while NIPPON PARKING DEVELOPMENTLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for NIPPON PARKING DEVELOPMENTLtd 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.