JAPAN Creative Platform Group Co., Ltd. (TSE:7814) Pays A JP¥3.50 Dividend In Just Three Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see JAPAN Creative Platform Group Co., Ltd. (TSE:7814) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. In other words, investors can purchase JAPAN Creative Platform Group's shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 28th of August.

The company's next dividend payment will be JP¥3.50 per share. Last year, in total, the company distributed JP¥14.00 to shareholders. Based on the last year's worth of payments, JAPAN Creative Platform Group stock has a trailing yield of around 2.6% on the current share price of JP¥536.00. If you buy this business for its dividend, you should have an idea of whether JAPAN Creative Platform Group's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. JAPAN Creative Platform Group is paying out just 15% 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. What's good is that dividends were well covered by free cash flow, with the company paying out 13% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for JAPAN Creative Platform Group

Click here to see how much of its profit JAPAN Creative Platform Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see JAPAN Creative Platform Group's earnings per share have been shrinking at 2.2% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, JAPAN Creative Platform Group has lifted its dividend by approximately 8.8% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid JAPAN Creative Platform Group? JAPAN Creative Platform Group 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 JAPAN Creative Platform Group's dividend merits.

While it's tempting to invest in JAPAN Creative Platform Group for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 2 warning signs for JAPAN Creative Platform Group (1 is significant) you should be aware of.

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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.