Only Three Days Left To Cash In On B-R 31 Ice CreamLtd's (TSE:2268) Dividend

B-R 31 Ice Cream Co.,Ltd. (TSE:2268) stock is about to trade ex-dividend in three 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase B-R 31 Ice CreamLtd's shares before the 27th of June to receive the dividend, which will be paid on the 3rd of September.

The company's next dividend payment will be JP¥25.00 per share, and in the last 12 months, the company paid a total of JP¥50.00 per share. Based on the last year's worth of payments, B-R 31 Ice CreamLtd has a trailing yield of 1.2% on the current stock price of JP¥4230.00. If you buy this business for its dividend, you should have an idea of whether B-R 31 Ice CreamLtd's dividend is reliable and sustainable. So we need to investigate whether B-R 31 Ice CreamLtd can afford its dividend, and if the dividend could grow.

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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. B-R 31 Ice CreamLtd paid out a comfortable 30% of its profit last year. 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 84% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that B-R 31 Ice CreamLtd'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 B-R 31 Ice CreamLtd

Click here to see how much of its profit B-R 31 Ice CreamLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why we're glad to see earnings per share up 5.7% over the past 12 months. 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.

One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past three years, B-R 31 Ice CreamLtd has increased its dividend at approximately 19% 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.

The Bottom Line

Is B-R 31 Ice CreamLtd an attractive dividend stock, or better left on the shelf? Earnings per share growth has been modest, and it's interesting that B-R 31 Ice CreamLtd is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

Want to learn more about B-R 31 Ice CreamLtd's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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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.