Do These 3 Checks Before Buying teno. Holdings Company Limited (TSE:7037) For Its Upcoming Dividend

Readers hoping to buy teno. Holdings Company Limited (TSE:7037) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase teno. Holdings' shares before the 27th of December in order to be eligible for the dividend, which will be paid on the 25th of March.

The company's next dividend payment will be JP¥9.00 per share. Last year, in total, the company distributed JP¥9.00 to shareholders. Calculating the last year's worth of payments shows that teno. Holdings has a trailing yield of 1.9% on the current share price of JP¥466.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for teno. Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. teno. Holdings lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If teno. Holdings didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

Click here to see how much of its profit teno. Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. teno. Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past six years, teno. Holdings has increased its dividend at approximately 2.7% a year on average.

We update our analysis on teno. Holdings every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Is teno. Holdings worth buying for its dividend? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. It's not that we think teno. Holdings is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with teno. Holdings. For instance, we've identified 5 warning signs for teno. Holdings (3 shouldn't be ignored) 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.