France Bed Holdings Co.,Ltd. (TSE:7840) Passed Our Checks, And It's About To Pay A JP¥17.00 Dividend

France Bed Holdings Co.,Ltd. (TSE:7840) stock is about to trade ex-dividend in 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase France Bed HoldingsLtd's shares before the 29th of September to receive the dividend, which will be paid on the 5th of December.

The company's next dividend payment will be JP¥17.00 per share. Last year, in total, the company distributed JP¥41.00 to shareholders. Last year's total dividend payments show that France Bed HoldingsLtd has a trailing yield of 3.2% on the current share price of JP¥1296.00. If you buy this business for its dividend, you should have an idea of whether France Bed HoldingsLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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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. France Bed HoldingsLtd paid out a comfortable 50% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (54%) of its free cash flow in the past year, which is within an average range for most companies.

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.

See our latest analysis for France Bed HoldingsLtd

Click here to see how much of its profit France Bed HoldingsLtd 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see France Bed HoldingsLtd's earnings per share have risen 16% per annum over the last five years. France Bed HoldingsLtd has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. France Bed HoldingsLtd has delivered an average of 6.2% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is France Bed HoldingsLtd worth buying for its dividend? Earnings per share have grown at a nice rate in recent times and over the last year, France Bed HoldingsLtd paid out less than half its earnings and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

Want to learn more about France Bed HoldingsLtd's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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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.