Phil Company,Inc. (TSE:3267) Goes Ex-Dividend Soon

Phil Company,Inc. (TSE:3267) is about to trade ex-dividend in the next 4 days. 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. Accordingly, Phil CompanyInc investors that purchase the stock on or after the 27th of November will not receive the dividend, which will be paid on the 19th of February.

The company's next dividend payment will be JP¥20.00 per share. Last year, in total, the company distributed JP¥15.00 to shareholders. Looking at the last 12 months of distributions, Phil CompanyInc has a trailing yield of approximately 1.6% on its current stock price of JP¥963.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Phil CompanyInc is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Phil CompanyInc generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 1.5% of its cash flow last year.

It's positive to see that Phil CompanyInc'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.

Check out our latest analysis for Phil CompanyInc

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Phil CompanyInc's 11% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Phil CompanyInc has delivered an average of 73% per year annual increase in its dividend, based on the past two years of dividend payments.

To Sum It Up

Is Phil CompanyInc an attractive dividend stock, or better left on the shelf? Phil CompanyInc has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. All things considered, we are not particularly enthused about Phil CompanyInc from a dividend perspective.

In light of that, while Phil CompanyInc has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Phil CompanyInc and you should be aware of these before buying any shares.

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.