Income Investors Should Know That First Brothers Co.,Ltd. (TSE:3454) Goes Ex-Dividend Soon

First Brothers Co.,Ltd. (TSE:3454) is about to trade ex-dividend in the next 4 days. The ex-dividend date generally occurs two days 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, First BrothersLtd investors that purchase the stock on or after the 27th of November will not receive the dividend, which will be paid on the 9th of February.

The company's upcoming dividend is JP¥35.00 a share, following on from the last 12 months, when the company distributed a total of JP¥35.00 per share to shareholders. Calculating the last year's worth of payments shows that First BrothersLtd has a trailing yield of 2.9% on the current share price of JP¥1218.00. If you buy this business for its dividend, you should have an idea of whether First BrothersLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately First BrothersLtd's payout ratio is modest, at just 30% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

View our latest analysis for First BrothersLtd

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. First BrothersLtd's earnings per share have fallen at approximately 6.4% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past nine years, First BrothersLtd has increased its dividend at approximately 9.9% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid First BrothersLtd? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.

If you're not too concerned about First BrothersLtd's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. To that end, you should learn about the 3 warning signs we've spotted with First BrothersLtd (including 2 which are significant).

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.