Be Sure To Check Out Nihon Suido Consultants Co., Ltd. (TSE:261A) Before It Goes Ex-Dividend

Readers hoping to buy Nihon Suido Consultants Co., Ltd. (TSE:261A) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Nihon Suido Consultants' shares before the 27th of June in order to receive the dividend, which the company will pay on the 1st of January.

The company's next dividend payment will be JP¥32.00 per share, and in the last 12 months, the company paid a total of JP¥64.00 per share. Calculating the last year's worth of payments shows that Nihon Suido Consultants has a trailing yield of 2.4% on the current share price of JP¥2699.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is 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. That's why it's good to see Nihon Suido Consultants paying out a modest 40% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (55%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Nihon Suido Consultants'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 Nihon Suido Consultants

Click here to see how much of its profit Nihon Suido Consultants 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. That's why we're optimistic about Nihon Suido Consultants's earnings, which have ripped higher, up 24% over the past year. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

Given that Nihon Suido Consultants has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Has Nihon Suido Consultants got what it takes to maintain its dividend payments? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. There's a lot to like about Nihon Suido Consultants, and we would prioritise taking a closer look at it.

While it's tempting to invest in Nihon Suido Consultants for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Nihon Suido Consultants (1 doesn't sit too well with us!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.