There's A Lot To Like About Kawanishi WarehouseLtd's (TSE:9322) Upcoming JP¥14.00 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Kawanishi Warehouse Co.,Ltd. (TSE:9322) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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 Kawanishi WarehouseLtd's shares on or after the 28th of March will not receive the dividend, which will be paid on the 26th of June.

The company's upcoming dividend is JP¥14.00 a share, following on from the last 12 months, when the company distributed a total of JP¥28.00 per share to shareholders. Calculating the last year's worth of payments shows that Kawanishi WarehouseLtd has a trailing yield of 2.6% on the current share price of JP¥1063.00. If you buy this business for its dividend, you should have an idea of whether Kawanishi WarehouseLtd's dividend is reliable and sustainable. As a result, readers should always check whether Kawanishi WarehouseLtd has been able to grow its dividends, or if the dividend might be cut.

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. That's why it's good to see Kawanishi WarehouseLtd paying out a modest 26% of its earnings. A useful secondary check can be to evaluate whether Kawanishi WarehouseLtd generated enough free cash flow to afford its dividend. It paid out 7.6% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Kawanishi WarehouseLtd'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.

Check out our latest analysis for Kawanishi WarehouseLtd

Click here to see how much of its profit Kawanishi WarehouseLtd paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Kawanishi WarehouseLtd's earnings per share have been growing at 16% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Kawanishi WarehouseLtd has increased its dividend at approximately 11% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

From a dividend perspective, should investors buy or avoid Kawanishi WarehouseLtd? Kawanishi WarehouseLtd has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

In light of that, while Kawanishi WarehouseLtd has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Kawanishi WarehouseLtd has 3 warning signs 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.