Why You Might Be Interested In Tokai Tokyo Financial Holdings, Inc. (TSE:8616) For Its Upcoming 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 Tokai Tokyo Financial Holdings, Inc. (TSE:8616) is about to go ex-dividend in just 3 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. 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 Tokai Tokyo Financial 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 next dividend payment will be JP¥16.00 per share, and in the last 12 months, the company paid a total of JP¥28.00 per share. Based on the last year's worth of payments, Tokai Tokyo Financial Holdings has a trailing yield of 5.4% on the current stock price of JP¥521.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Tokai Tokyo Financial Holdings paid out 55% of its earnings to investors last year, a normal payout level for most businesses.

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

See our latest analysis for Tokai Tokyo Financial Holdings

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Tokai Tokyo Financial Holdings has grown its earnings rapidly, up 65% 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. Tokai Tokyo Financial Holdings has seen its dividend decline 1.3% per annum on average over the past 10 years, which is not great to see.

To Sum It Up

Is Tokai Tokyo Financial Holdings worth buying for its dividend? Earnings per share are growing nicely, and Tokai Tokyo Financial Holdings is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Tokai Tokyo Financial Holdings more closely.

In light of that, while Tokai Tokyo Financial Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Tokai Tokyo Financial Holdings and you should be aware of it before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.