Why You Might Be Interested In Satudora Holdings Co.,Ltd. (TSE:3544) For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Satudora Holdings Co.,Ltd. (TSE:3544) is about to go ex-dividend in just four days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Accordingly, Satudora HoldingsLtd investors that purchase the stock on or after the 14th of May will not receive the dividend, which will be paid on the 12th of August.

The company's next dividend payment will be JP¥10.00 per share, on the back of last year when the company paid a total of JP¥10.00 to shareholders. Based on the last year's worth of payments, Satudora HoldingsLtd has a trailing yield of 1.1% on the current stock price of JP¥899.00. If you buy this business for its dividend, you should have an idea of whether Satudora HoldingsLtd's dividend is reliable and sustainable. So we need to investigate whether Satudora HoldingsLtd can afford its dividend, and if the dividend could grow.

Our free stock report includes 3 warning signs investors should be aware of before investing in Satudora HoldingsLtd. Read for free now.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Satudora HoldingsLtd paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Luckily it paid out just 9.3% of its free cash flow last year.

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.

View our latest analysis for Satudora HoldingsLtd

Click here to see how much of its profit Satudora HoldingsLtd 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. That's why it's comforting to see Satudora HoldingsLtd's earnings have been skyrocketing, up 89% per annum for the past five years. Satudora HoldingsLtd looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, eight years ago, Satudora HoldingsLtd has lifted its dividend by approximately 1.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Satudora HoldingsLtd is keeping back more of its profits to grow the business.

The Bottom Line

From a dividend perspective, should investors buy or avoid Satudora HoldingsLtd? Satudora HoldingsLtd has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Satudora HoldingsLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Satudora HoldingsLtd is facing. For example, we've found 3 warning signs for Satudora HoldingsLtd that we recommend you consider before investing in the business.

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.