OLBA HEALTHCARE HOLDINGS, Inc. (TSE:2689) Stock Goes Ex-Dividend In Just Three Days

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 OLBA HEALTHCARE HOLDINGS, Inc. (TSE:2689) is about to go ex-dividend in just 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase OLBA HEALTHCARE HOLDINGS' shares before the 27th of June in order to receive the dividend, which the company will pay on the 29th of September.

The company's next dividend payment will be JP¥80.00 per share. Last year, in total, the company distributed JP¥80.00 to shareholders. Based on the last year's worth of payments, OLBA HEALTHCARE HOLDINGS has a trailing yield of 3.8% on the current stock price of JP¥2123.00. If you buy this business for its dividend, you should have an idea of whether OLBA HEALTHCARE HOLDINGS's dividend is reliable and sustainable. As a result, readers should always check whether OLBA HEALTHCARE HOLDINGS has been able to grow its dividends, or if the dividend might be cut.

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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. That's why it's good to see OLBA HEALTHCARE HOLDINGS paying out a modest 36% of its earnings. A useful secondary check can be to evaluate whether OLBA HEALTHCARE HOLDINGS generated enough free cash flow to afford its dividend. Over the past year it paid out 138% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While OLBA HEALTHCARE HOLDINGS's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were OLBA HEALTHCARE HOLDINGS to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

See our latest analysis for OLBA HEALTHCARE HOLDINGS

Click here to see how much of its profit OLBA HEALTHCARE HOLDINGS 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at OLBA HEALTHCARE HOLDINGS, with earnings per share up 10.0% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, OLBA HEALTHCARE HOLDINGS has increased its dividend at approximately 10% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is OLBA HEALTHCARE HOLDINGS worth buying for its dividend? OLBA HEALTHCARE HOLDINGS has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

So if you want to do more digging on OLBA HEALTHCARE HOLDINGS, you'll find it worthwhile knowing the risks that this stock faces. For example - OLBA HEALTHCARE HOLDINGS has 2 warning signs we think you should be aware of.

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.