Three Days Left To Buy Eidai Kako Co.,Ltd. (TSE:7877) Before The Ex-Dividend Date

Eidai Kako Co.,Ltd. (TSE:7877) is about to trade ex-dividend in the next three 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 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. Meaning, you will need to purchase Eidai KakoLtd's shares before the 28th of March to receive the dividend, which will be paid on the 30th of June.

The company's upcoming dividend is JP¥60.00 a share, following on from the last 12 months, when the company distributed a total of JP¥50.00 per share to shareholders. Looking at the last 12 months of distributions, Eidai KakoLtd has a trailing yield of approximately 3.1% on its current stock price of JP¥1590.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is 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. That's why it's good to see Eidai KakoLtd paying out a modest 30% of its earnings. A useful secondary check can be to evaluate whether Eidai KakoLtd generated enough free cash flow to afford its dividend. Luckily it paid out just 18% of its free cash flow last year.

It's positive to see that Eidai KakoLtd'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.

View our latest analysis for Eidai KakoLtd

Click here to see how much of its profit Eidai KakoLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Eidai KakoLtd's earnings per share have been shrinking at 3.8% a year over the previous 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 last 10 years, Eidai KakoLtd has lifted its dividend by approximately 2.3% a year on average.

To Sum It Up

Has Eidai KakoLtd got what it takes to maintain its dividend payments? Eidai KakoLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, while it has some positive characteristics, we're not inclined to race out and buy Eidai KakoLtd today.

In light of that, while Eidai KakoLtd has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for Eidai KakoLtd (1 is potentially serious!) that deserve your attention before investing in the shares.

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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.