Income Investors Should Know That Funai Soken Holdings Incorporated (TSE:9757) Goes Ex-Dividend Soon

It looks like Funai Soken Holdings Incorporated (TSE:9757) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Funai Soken Holdings' shares before the 27th of December in order to be eligible for the dividend, which will be paid on the 25th of March.

The company's next dividend payment will be JP¥38.00 per share, and in the last 12 months, the company paid a total of JP¥76.00 per share. Based on the last year's worth of payments, Funai Soken Holdings has a trailing yield of 3.2% on the current stock price of JP¥2400.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Funai Soken Holdings can afford its dividend, and if the dividend could grow.

View our latest analysis for Funai Soken Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Funai Soken Holdings paid out 57% 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. Over the last year it paid out 59% of its free cash flow as dividends, within the usual range for most companies.

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.

Click here to see how much of its profit Funai Soken Holdings paid out over the last 12 months.

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. For this reason, we're glad to see Funai Soken Holdings's earnings per share have risen 12% per annum over the last five years. Funai Soken Holdings is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Funai Soken Holdings has increased its dividend at approximately 16% 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.

To Sum It Up

From a dividend perspective, should investors buy or avoid Funai Soken Holdings? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Funai Soken Holdings's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 57% and 59% respectively. Overall, it's hard to get excited about Funai Soken Holdings from a dividend perspective.

So while Funai Soken Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for Funai Soken 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.