There's A Lot To Like About Sun-Life HoldingLtd's (TSE:7040) Upcoming JP¥17.00 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Sun-Life Holding Co.,Ltd. (TSE:7040) is about to go ex-dividend in just 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. Thus, you can purchase Sun-Life HoldingLtd's shares before the 28th of March in order to receive the dividend, which the company will pay on the 16th of June.

The company's next dividend payment will be JP¥17.00 per share. Last year, in total, the company distributed JP¥34.00 to shareholders. Based on the last year's worth of payments, Sun-Life HoldingLtd has a trailing yield of 3.5% on the current stock price of JP¥959.00. If you buy this business for its dividend, you should have an idea of whether Sun-Life HoldingLtd's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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. Sun-Life HoldingLtd is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Fortunately, it paid out only 28% of its free cash flow in the past year.

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 Sun-Life HoldingLtd

Click here to see how much of its profit Sun-Life HoldingLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Sun-Life HoldingLtd's earnings per share have been growing at 16% a year for the past five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Sun-Life HoldingLtd has increased its dividend at approximately 1.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Sun-Life HoldingLtd is keeping back more of its profits to grow the business.

To Sum It Up

Is Sun-Life HoldingLtd worth buying for its dividend? Sun-Life HoldingLtd has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks Sun-Life HoldingLtd is facing. For example, we've found 2 warning signs for Sun-Life HoldingLtd that we recommend you consider before investing in the business.

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.