Three Days Left Until AZUMA HOUSE Co., Ltd. (TSE:3293) Trades Ex-Dividend

AZUMA HOUSE Co., Ltd. (TSE:3293) stock is about to trade ex-dividend in 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 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. Accordingly, AZUMA HOUSE investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 30th of June.

The company's next dividend payment will be JP¥17.50 per share, on the back of last year when the company paid a total of JP¥35.00 to shareholders. Based on the last year's worth of payments, AZUMA HOUSE stock has a trailing yield of around 4.6% on the current share price of JP¥764.00. If you buy this business for its dividend, you should have an idea of whether AZUMA HOUSE'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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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. AZUMA HOUSE paid out a comfortable 29% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 58% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that AZUMA HOUSE'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.

See our latest analysis for AZUMA HOUSE

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about AZUMA HOUSE's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the AZUMA HOUSE dividends are largely the same as they were 10 years ago.

The Bottom Line

From a dividend perspective, should investors buy or avoid AZUMA HOUSE? Earnings per share are down very slightly in recent times, and AZUMA HOUSE paid out less half its profit and more than half its cash flow as dividends, which is not the worst combination but could be better. In summary, while it has some positive characteristics, we're not inclined to race out and buy AZUMA HOUSE today.

If you want to look further into AZUMA HOUSE, it's worth knowing the risks this business faces. We've identified 2 warning signs with AZUMA HOUSE (at least 1 which doesn't sit too well with us), and understanding these should be part of your investment process.

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.