Is It Smart To Buy FP Partner Inc. (TSE:7388) Before It Goes Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see FP Partner Inc. (TSE:7388) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a 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. Therefore, if you purchase FP Partner's shares on or after the 29th of May, you won't be eligible to receive the dividend, when it is paid on the 12th of August.

The company's next dividend payment will be JP¥47.00 per share, and in the last 12 months, the company paid a total of JP¥94.00 per share. Calculating the last year's worth of payments shows that FP Partner has a trailing yield of 3.7% on the current share price of JP¥2536.00. If you buy this business for its dividend, you should have an idea of whether FP Partner'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 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. FP Partner paid out 60% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Check out our latest analysis for FP Partner

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

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. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see FP Partner's earnings have been skyrocketing, up 48% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. FP Partner has delivered 12% dividend growth per year on average over the past two years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Should investors buy FP Partner for the upcoming dividend? Earnings per share are growing nicely, and FP Partner is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, FP Partner looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in FP Partner for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for FP Partner that we recommend you consider before investing in the business.

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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.