Is It Worth Considering RIDE ON EXPRESS HOLDINGS Co., Ltd. (TSE:6082) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see RIDE ON EXPRESS HOLDINGS Co., Ltd. (TSE:6082) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase RIDE ON EXPRESS HOLDINGS' shares on or after the 28th of March, you won't be eligible to receive the dividend, when it is paid on the 27th of June.

The company's upcoming dividend is JP¥15.00 a share, following on from the last 12 months, when the company distributed a total of JP¥15.00 per share to shareholders. Looking at the last 12 months of distributions, RIDE ON EXPRESS HOLDINGS has a trailing yield of approximately 1.4% on its current stock price of JP¥1055.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see RIDE ON EXPRESS HOLDINGS paying out a modest 49% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (61%) of its free cash flow in the past year, which is within an average range 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.

View our latest analysis for RIDE ON EXPRESS HOLDINGS

Click here to see how much of its profit RIDE ON EXPRESS HOLDINGS paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see RIDE ON EXPRESS HOLDINGS's earnings per share have dropped 14% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. RIDE ON EXPRESS HOLDINGS has delivered 4.1% dividend growth per year on average over the past 10 years.

The Bottom Line

Is RIDE ON EXPRESS HOLDINGS worth buying for its dividend? Earnings per share have fallen significantly, although at least RIDE ON EXPRESS HOLDINGS paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. All things considered, we are not particularly enthused about RIDE ON EXPRESS HOLDINGS from a dividend perspective.

So if you want to do more digging on RIDE ON EXPRESS HOLDINGS, you'll find it worthwhile knowing the risks that this stock faces. Every company has risks, and we've spotted 2 warning signs for RIDE ON EXPRESS HOLDINGS you should know about.

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.