Why You Might Be Interested In Toyo Securities Co., Ltd. (TSE:8614) For Its Upcoming Dividend

It looks like Toyo Securities Co., Ltd. (TSE:8614) is about to go ex-dividend in the next 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. Meaning, you will need to purchase Toyo Securities' shares before the 28th of March to receive the dividend, which will be paid on the 3rd of June.

The company's next dividend payment will be JP¥50.00 per share, and in the last 12 months, the company paid a total of JP¥10.00 per share. Last year's total dividend payments show that Toyo Securities has a trailing yield of 1.7% on the current share price of JP¥592.00. If you buy this business for its dividend, you should have an idea of whether Toyo Securities's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's 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. That's why it's good to see Toyo Securities paying out a modest 37% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

See our latest analysis for Toyo Securities

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Toyo Securities's earnings per share have been growing at 10% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Toyo Securities has seen its dividend decline 1.8% per annum on average over the past 10 years, which is not great to see.

Final Takeaway

Should investors buy Toyo Securities for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Toyo Securities more closely.

While it's tempting to invest in Toyo Securities for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Toyo Securities and understanding them should be part of your investment process.

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.