Is It Smart To Buy Ichiyoshi Securities Co., Ltd. (TSE:8624) Before It Goes Ex-Dividend?

Ichiyoshi Securities Co., Ltd. (TSE:8624) stock is about to trade ex-dividend in 3 days. The ex-dividend date occurs one day 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Ichiyoshi Securities' shares on or after the 27th of September, you won't be eligible to receive the dividend, when it is paid on the 27th of November.

The company's upcoming dividend is JP¥17.00 a share, following on from the last 12 months, when the company distributed a total of JP¥34.00 per share to shareholders. Based on the last year's worth of payments, Ichiyoshi Securities has a trailing yield of 4.8% on the current stock price of JP¥703.00. If you buy this business for its dividend, you should have an idea of whether Ichiyoshi Securities's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Ichiyoshi Securities

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. Ichiyoshi Securities paid out more than half (56%) of its earnings last year, which is a regular payout ratio for most companies.

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.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Ichiyoshi Securities, with earnings per share up 9.0% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Ichiyoshi Securities's dividend payments per share have declined at 9.3% per year on average over the past 10 years, which is uninspiring. Ichiyoshi Securities is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Should investors buy Ichiyoshi Securities for the upcoming dividend? Ichiyoshi Securities has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We think there are likely better opportunities out there.

However if you're still interested in Ichiyoshi Securities as a potential investment, you should definitely consider some of the risks involved with Ichiyoshi Securities. In terms of investment risks, we've identified 1 warning sign with Ichiyoshi Securities and understanding them should be part of your investment process.

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.