Mitsui Chemicals, Inc. (TSE:4183) Goes Ex-Dividend Soon

Readers hoping to buy Mitsui Chemicals, Inc. (TSE:4183) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Mitsui Chemicals' shares before the 27th of September in order to receive the dividend, which the company will pay on the 4th of December.

The company's upcoming dividend is JP¥75.00 a share, following on from the last 12 months, when the company distributed a total of JP¥150 per share to shareholders. Last year's total dividend payments show that Mitsui Chemicals has a trailing yield of 3.9% on the current share price of JP¥3880.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Mitsui Chemicals

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Mitsui Chemicals paid out a comfortable 46% of its profit last year. A useful secondary check can be to evaluate whether Mitsui Chemicals generated enough free cash flow to afford its dividend. Over the last year it paid out 53% of its free cash flow as dividends, within the usual 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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Mitsui Chemicals's earnings are down 4.5% a year over 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. In the past 10 years, Mitsui Chemicals has increased its dividend at approximately 17% a year on average.

Final Takeaway

Has Mitsui Chemicals got what it takes to maintain its dividend payments? Earnings per share have fallen significantly, although at least Mitsui Chemicals paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. All things considered, we are not particularly enthused about Mitsui Chemicals from a dividend perspective.

If you're not too concerned about Mitsui Chemicals's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 3 warning signs for Mitsui Chemicals that we recommend you consider before investing in the business.

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.