Four Days Left To Buy MEITEC Group Holdings Inc. (TSE:9744) Before The Ex-Dividend Date

It looks like MEITEC Group Holdings Inc. (TSE:9744) is about to go ex-dividend in the next four 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. Accordingly, MEITEC Group Holdings investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 23rd of June.

The company's upcoming dividend is JP¥97.00 a share, following on from the last 12 months, when the company distributed a total of JP¥164 per share to shareholders. Calculating the last year's worth of payments shows that MEITEC Group Holdings has a trailing yield of 5.4% on the current share price of JP¥3018.00. If you buy this business for its dividend, you should have an idea of whether MEITEC Group Holdings's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Its dividend payout ratio is 90% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. A useful secondary check can be to evaluate whether MEITEC Group Holdings generated enough free cash flow to afford its dividend. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that MEITEC Group 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.

View our latest analysis for MEITEC Group Holdings

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at MEITEC Group Holdings, with earnings per share up 8.7% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. MEITEC Group Holdings has delivered an average of 20% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is MEITEC Group Holdings an attractive dividend stock, or better left on the shelf? Earnings per share have been growing modestly and MEITEC Group Holdings paid out a bit over half of its earnings and free cash flow last year. In summary, it's hard to get excited about MEITEC Group Holdings from a dividend perspective.

With that being said, if dividends aren't your biggest concern with MEITEC Group Holdings, you should know about the other risks facing this business. Every company has risks, and we've spotted 1 warning sign for MEITEC Group Holdings you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.