BELLSYSTEM24 Holdings, Inc. (TSE:6183) Will Pay A JP¥30.00 Dividend In Three Days

It looks like BELLSYSTEM24 Holdings, Inc. (TSE:6183) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day 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. This means that investors who purchase BELLSYSTEM24 Holdings' shares on or after the 27th of February will not receive the dividend, which will be paid on the 27th of May.

The company's next dividend payment will be JP¥30.00 per share, and in the last 12 months, the company paid a total of JP¥60.00 per share. Calculating the last year's worth of payments shows that BELLSYSTEM24 Holdings has a trailing yield of 4.8% on the current share price of JP¥1262.00. 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 investigate whether BELLSYSTEM24 Holdings can afford its dividend, and if the dividend could grow.

Check out our latest analysis for BELLSYSTEM24 Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. BELLSYSTEM24 Holdings paid out 71% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether BELLSYSTEM24 Holdings generated enough free cash flow to afford its dividend. Fortunately, it paid out only 27% of its free cash flow in the past year.

It's positive to see that BELLSYSTEM24 Holdings'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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see BELLSYSTEM24 Holdings earnings per share are up 2.9% per annum over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last nine years, BELLSYSTEM24 Holdings has lifted its dividend by approximately 14% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Is BELLSYSTEM24 Holdings worth buying for its dividend? While earnings per share growth has been modest, BELLSYSTEM24 Holdings's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. To summarise, BELLSYSTEM24 Holdings looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in BELLSYSTEM24 Holdings for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for BELLSYSTEM24 Holdings you should be aware of.

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.