Interested In Sasatoku PrintingLtd's (TSE:3958) Upcoming JP¥10.00 Dividend? You Have Four Days Left

Sasatoku Printing Co.,Ltd. (TSE:3958) is about to trade ex-dividend in the next four 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Sasatoku PrintingLtd investors that purchase the stock on or after the 27th of June will not receive the dividend, which will be paid on the 9th of September.

The company's next dividend payment will be JP¥10.00 per share, on the back of last year when the company paid a total of JP¥18.00 to shareholders. Calculating the last year's worth of payments shows that Sasatoku PrintingLtd has a trailing yield of 3.3% on the current share price of JP¥542.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are 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. Sasatoku PrintingLtd is paying out just 23% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Luckily it paid out just 21% of its free cash flow last year.

It's positive to see that Sasatoku PrintingLtd'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 Sasatoku PrintingLtd

Click here to see how much of its profit Sasatoku PrintingLtd 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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Sasatoku PrintingLtd's earnings per share have been shrinking at 4.5% a year over the previous five years.

Unfortunately Sasatoku PrintingLtd has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

Has Sasatoku PrintingLtd got what it takes to maintain its dividend payments? Sasatoku PrintingLtd 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. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Sasatoku PrintingLtd's dividend merits.

While it's tempting to invest in Sasatoku PrintingLtd 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 Sasatoku PrintingLtd (including 1 which is a bit unpleasant).

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.