Just Three Days Till Kaneko Seeds Co., Ltd. (TSE:1376) Will Be Trading Ex-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 Kaneko Seeds Co., Ltd. (TSE:1376) is about to go ex-dividend in just three days. The ex-dividend date is one business day 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. 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 Kaneko Seeds' shares on or after the 28th of November, you won't be eligible to receive the dividend, when it is paid on the 5th of February.

The company's next dividend payment will be JP¥11.00 per share, on the back of last year when the company paid a total of JP¥33.00 to shareholders. Based on the last year's worth of payments, Kaneko Seeds has a trailing yield of 2.4% on the current stock price of JP¥1398.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Kaneko Seeds can afford its dividend, and if the dividend could grow.

View our latest analysis for Kaneko Seeds

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 Kaneko Seeds's payout ratio is modest, at just 35% of profit. A useful secondary check can be to evaluate whether Kaneko Seeds generated enough free cash flow to afford its dividend. The good news is it paid out just 23% of its free cash flow in the last 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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Kaneko Seeds's earnings per share have been shrinking at 2.6% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Kaneko Seeds has delivered 4.1% dividend growth per year on average over the past 10 years.

Final Takeaway

Is Kaneko Seeds an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about Kaneko Seeds from a dividend perspective.

Curious about whether Kaneko Seeds has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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.