Only Three Days Left To Cash In On YAMADA Consulting GroupLtd's (TSE:4792) Dividend

It looks like YAMADA Consulting Group Co.,Ltd. (TSE:4792) is about to go ex-dividend in the next 3 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 as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase YAMADA Consulting GroupLtd's shares before the 28th of March to receive the dividend, which will be paid on the 10th of June.

The company's next dividend payment will be JP¥38.00 per share, on the back of last year when the company paid a total of JP¥76.00 to shareholders. Based on the last year's worth of payments, YAMADA Consulting GroupLtd has a trailing yield of 4.3% on the current stock price of JP¥1778.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether YAMADA Consulting GroupLtd has been able to grow its dividends, or if the dividend might be cut.

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. YAMADA Consulting GroupLtd is paying out an acceptable 52% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether YAMADA Consulting GroupLtd generated enough free cash flow to afford its dividend. It paid out 97% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

While YAMADA Consulting GroupLtd's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to YAMADA Consulting GroupLtd's ability to maintain its dividend.

View our latest analysis for YAMADA Consulting GroupLtd

Click here to see how much of its profit YAMADA Consulting GroupLtd paid out over the last 12 months.

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, YAMADA Consulting GroupLtd's earnings per share have been growing at 13% a year for the past five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, YAMADA Consulting GroupLtd has increased its dividend at approximately 13% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is YAMADA Consulting GroupLtd worth buying for its dividend? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note YAMADA Consulting GroupLtd paid out a much higher percentage of its free cash flow, which makes us uncomfortable. In summary, while it has some positive characteristics, we're not inclined to race out and buy YAMADA Consulting GroupLtd today.

If you're not too concerned about YAMADA Consulting GroupLtd's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Every company has risks, and we've spotted 2 warning signs for YAMADA Consulting GroupLtd (of which 1 is concerning!) you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.