Be Sure To Check Out Dai-ichi Life Holdings, Inc. (TSE:8750) 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 Dai-ichi Life Holdings, Inc. (TSE:8750) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Dai-ichi Life Holdings' shares before the 27th of September to receive the dividend, which will be paid on the 1st of January.

The company's upcoming dividend is JP¥61.00 a share, following on from the last 12 months, when the company distributed a total of JP¥122 per share to shareholders. Last year's total dividend payments show that Dai-ichi Life Holdings has a trailing yield of 3.4% on the current share price of JP¥3641.00. If you buy this business for its dividend, you should have an idea of whether Dai-ichi Life Holdings's dividend is reliable and sustainable. So we need to investigate whether Dai-ichi Life Holdings can afford its dividend, and if the dividend could grow.

View our latest analysis for Dai-ichi Life Holdings

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. Fortunately Dai-ichi Life Holdings's payout ratio is modest, at just 28% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Dai-ichi Life Holdings's earnings per share have risen 17% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Dai-ichi Life Holdings has increased its dividend at approximately 20% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

From a dividend perspective, should investors buy or avoid Dai-ichi Life Holdings? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Dai-ichi Life Holdings ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in Dai-ichi Life Holdings for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Dai-ichi Life Holdings you should know about.

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.