Be Sure To Check Out ISE Chemicals Corporation (TSE:4107) Before It Goes Ex-Dividend

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 ISE Chemicals Corporation (TSE:4107) is about to go ex-dividend in just 3 days. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase ISE Chemicals' shares before the 27th of December to receive the dividend, which will be paid on the 28th of March.

The company's upcoming dividend is JP¥160.00 a share, following on from the last 12 months, when the company distributed a total of JP¥320 per share to shareholders. Looking at the last 12 months of distributions, ISE Chemicals has a trailing yield of approximately 1.2% on its current stock price of JP¥26210.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether ISE Chemicals can afford its dividend, and if the dividend could grow.

View our latest analysis for ISE Chemicals

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. ISE Chemicals paid out a comfortable 28% 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. It paid out 88% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that ISE Chemicals'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 how much of its profit ISE Chemicals paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see ISE Chemicals has grown its earnings rapidly, up 53% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. ISE Chemicals has delivered 14% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is ISE Chemicals an attractive dividend stock, or better left on the shelf? Earnings per share have grown at a nice rate in recent times and over the last year, ISE Chemicals paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about ISE Chemicals, and we would prioritise taking a closer look at it.

While it's tempting to invest in ISE Chemicals for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for ISE Chemicals you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.