Three Days Left Until Fujimori Kogyo Co., Ltd. (TSE:7917) Trades Ex-Dividend

Fujimori Kogyo Co., Ltd. (TSE:7917) stock is about to trade ex-dividend in 3 days. The ex-dividend date is usually set to be one business day 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. 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. Therefore, if you purchase Fujimori Kogyo's shares on or after the 27th of September, you won't be eligible to receive the dividend, when it is paid on the 27th of November.

The company's next dividend payment will be JP¥63.00 per share. Last year, in total, the company distributed JP¥106 to shareholders. Calculating the last year's worth of payments shows that Fujimori Kogyo has a trailing yield of 2.4% on the current share price of JP¥4400.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Fujimori Kogyo can afford its dividend, and if the dividend could grow.

View our latest analysis for Fujimori Kogyo

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Fujimori Kogyo paying out a modest 31% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 50% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Fujimori Kogyo'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Fujimori Kogyo's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Fujimori Kogyo has delivered an average of 8.7% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Should investors buy Fujimori Kogyo for the upcoming dividend? Earnings per share are down very slightly in recent times, and Fujimori Kogyo paid out less half its profit and more than half its cash flow as dividends, which is not the worst combination but could be better. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

If you're not too concerned about Fujimori Kogyo'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 1 warning sign for Fujimori Kogyo that we recommend you consider before investing in the business.

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.