Nakamoto Packs Co.,Ltd. (TSE:7811) Is About To Go Ex-Dividend, And It Pays A 3.7% Yield

Nakamoto Packs Co.,Ltd. (TSE:7811) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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 Nakamoto PacksLtd's shares on or after the 27th of February will not receive the dividend, which will be paid on the 30th of May.

The company's upcoming dividend is JP¥34.00 a share, following on from the last 12 months, when the company distributed a total of JP¥64.00 per share to shareholders. Based on the last year's worth of payments, Nakamoto PacksLtd stock has a trailing yield of around 3.7% on the current share price of JP¥1725.00. If you buy this business for its dividend, you should have an idea of whether Nakamoto PacksLtd's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Nakamoto PacksLtd

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Nakamoto PacksLtd has a low and conservative payout ratio of just 22% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 28% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Nakamoto PacksLtd'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?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that Nakamoto PacksLtd's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last nine years, Nakamoto PacksLtd has lifted its dividend by approximately 5.4% a year on average.

Final Takeaway

Is Nakamoto PacksLtd an attractive dividend stock, or better left on the shelf? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. All things considered, we are not particularly enthused about Nakamoto PacksLtd from a dividend perspective.

So while Nakamoto PacksLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Nakamoto PacksLtd has 1 warning sign we think you should be aware of.

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.