MEITEC Group Holdings Inc. (TSE:9744) Will Pay A JP¥88.00 Dividend In Four Days

MEITEC Group Holdings Inc. (TSE:9744) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase MEITEC Group Holdings' shares on or after the 27th of September will not receive the dividend, which will be paid on the 2nd of December.

The company's next dividend payment will be JP¥88.00 per share. Last year, in total, the company distributed JP¥158 to shareholders. Calculating the last year's worth of payments shows that MEITEC Group Holdings has a trailing yield of 4.8% on the current share price of JP¥3265.00. If you buy this business for its dividend, you should have an idea of whether MEITEC Group Holdings's dividend is reliable and sustainable. As a result, readers should always check whether MEITEC Group Holdings has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for MEITEC Group Holdings

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. MEITEC Group Holdings paid out 69% of its earnings to investors last year, a normal payout level for most businesses. 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. It paid out more than half (58%) 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.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 9.8% on average over the last five years. Decent historical earnings per share growth suggests MEITEC Group Holdings has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. 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. Since the start of our data, 10 years ago, MEITEC Group Holdings has lifted its dividend by approximately 21% 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.

To Sum It Up

Has MEITEC Group Holdings got what it takes to maintain its dividend payments? 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. All things considered, we are not particularly enthused about MEITEC Group Holdings from a dividend perspective.

However if you're still interested in MEITEC Group Holdings as a potential investment, you should definitely consider some of the risks involved with MEITEC Group Holdings. In terms of investment risks, we've identified 1 warning sign with MEITEC Group Holdings and understanding them should be part of your investment process.

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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.