DOUTOR NICHIRES Holdings Co., Ltd. (TSE:3087) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

DOUTOR NICHIRES Holdings Co., Ltd. (TSE:3087) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase DOUTOR NICHIRES Holdings' shares on or after the 27th of February, you won't be eligible to receive the dividend, when it is paid on the 29th of May.

The company's next dividend payment will be JP¥25.00 per share, on the back of last year when the company paid a total of JP¥50.00 to shareholders. Based on the last year's worth of payments, DOUTOR NICHIRES Holdings has a trailing yield of 2.1% on the current stock price of JP¥2351.00. If you buy this business for its dividend, you should have an idea of whether DOUTOR NICHIRES Holdings's dividend is reliable and sustainable. As a result, readers should always check whether DOUTOR NICHIRES Holdings has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for DOUTOR NICHIRES Holdings

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. Fortunately DOUTOR NICHIRES Holdings's payout ratio is modest, at just 30% of profit. A useful secondary check can be to evaluate whether DOUTOR NICHIRES Holdings generated enough free cash flow to afford its dividend. It distributed 25% of its free cash flow as dividends, a comfortable payout level 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about DOUTOR NICHIRES Holdings'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. Recent growth has not been impressive. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. DOUTOR NICHIRES Holdings has delivered 6.0% dividend growth per year on average over the past 10 years.

Final Takeaway

Is DOUTOR NICHIRES Holdings an attractive dividend stock, or better left on the shelf? Earnings per share have been flat over this time, but we're intrigued to see that DOUTOR NICHIRES Holdings is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. Generally we like to see both low payout ratios and strong earnings per share growth, but DOUTOR NICHIRES Holdings is halfway there. It's a promising combination that should mark this company worthy of closer attention.

So while DOUTOR NICHIRES Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for DOUTOR NICHIRES Holdings you should be aware of.

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.