KeyHolder, Inc. (TSE:4712) Passed Our Checks, And It's About To Pay A JP¥10.00 Dividend

KeyHolder, Inc. (TSE:4712) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day 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. Thus, you can purchase KeyHolder's shares before the 27th of December in order to receive the dividend, which the company will pay on the 27th of March.

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. Looking at the last 12 months of distributions, KeyHolder has a trailing yield of approximately 1.4% on its current stock price of JP¥708.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for KeyHolder

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately KeyHolder's payout ratio is modest, at just 27% of profit.

Click here to see how much of its profit KeyHolder 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that KeyHolder's earnings are effectively flat 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. Earnings per share growth in recent times has not been a standout. 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. KeyHolder's dividend payments per share have declined at 6.7% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Is KeyHolder an attractive dividend stock, or better left on the shelf? KeyHolder has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating KeyHolder more closely.

In light of that, while KeyHolder has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for KeyHolder and you should be aware of this before buying any shares.

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.