SUNNY SIDE UP GROUP Inc. (TSE:2180) Passed Our Checks, And It's About To Pay A JP¥15.00 Dividend

SUNNY SIDE UP GROUP Inc. (TSE:2180) stock is about to trade ex-dividend in three 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase SUNNY SIDE UP GROUP's shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 27th of September.

The company's next dividend payment will be JP¥15.00 per share, and in the last 12 months, the company paid a total of JP¥30.00 per share. Calculating the last year's worth of payments shows that SUNNY SIDE UP GROUP has a trailing yield of 4.6% on the current share price of JP¥651.00. If you buy this business for its dividend, you should have an idea of whether SUNNY SIDE UP GROUP's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for SUNNY SIDE UP GROUP

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. SUNNY SIDE UP GROUP is paying out just 19% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Luckily it paid out just 19% of its free cash flow last year.

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 how much of its profit SUNNY SIDE UP GROUP paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see SUNNY SIDE UP GROUP has grown its earnings rapidly, up 25% a year for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, SUNNY SIDE UP GROUP looks like a promising growth company.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. SUNNY SIDE UP GROUP has delivered 20% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is SUNNY SIDE UP GROUP worth buying for its dividend? It's great that SUNNY SIDE UP GROUP is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about SUNNY SIDE UP GROUP, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks SUNNY SIDE UP GROUP is facing. For example, we've found 2 warning signs for SUNNY SIDE UP GROUP 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com