Is It Worth Considering Kirin Holdings Company, Limited (TSE:2503) For Its Upcoming Dividend?

Readers hoping to buy Kirin Holdings Company, Limited (TSE:2503) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. 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. Accordingly, Kirin Holdings Company investors that purchase the stock on or after the 27th of June will not receive the dividend, which will be paid on the 5th of September.

The company's next dividend payment will be JP¥35.50 per share, on the back of last year when the company paid a total of JP¥71.00 to shareholders. Last year's total dividend payments show that Kirin Holdings Company has a trailing yield of 3.4% on the current share price of JP¥2083.00. If you buy this business for its dividend, you should have an idea of whether Kirin Holdings Company's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Kirin Holdings Company

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. Kirin Holdings Company paid out a comfortable 43% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 61% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Kirin Holdings Company's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Kirin Holdings Company's earnings are down 2.2% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Kirin Holdings Company has lifted its dividend by approximately 7.0% a year on average.

The Bottom Line

Is Kirin Holdings Company an attractive dividend stock, or better left on the shelf? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. Overall, it's hard to get excited about Kirin Holdings Company from a dividend perspective.

However if you're still interested in Kirin Holdings Company as a potential investment, you should definitely consider some of the risks involved with Kirin Holdings Company. In terms of investment risks, we've identified 1 warning sign with Kirin Holdings Company 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.

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