Three Days Left To Buy Ateam Inc. (TSE:3662) Before The Ex-Dividend Date

Ateam Inc. (TSE:3662) stock is about to trade ex-dividend in three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Ateam's shares on or after the 30th of July, you won't be eligible to receive the dividend, when it is paid on the 7th of October.

The company's next dividend payment will be JP¥22.00 per share, and in the last 12 months, the company paid a total of JP¥22.00 per share. Last year's total dividend payments show that Ateam has a trailing yield of 3.2% on the current share price of JP¥687.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Ateam

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Ateam paid out a comfortable 41% of its profit last year. A useful secondary check can be to evaluate whether Ateam generated enough free cash flow to afford its dividend. Dividends consumed 64% 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 Ateam'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 Ateam 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by Ateam's 26% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Ateam has lifted its dividend by approximately 16% a year on average.

The Bottom Line

Is Ateam worth buying for its dividend? Earnings per share have fallen significantly, although at least Ateam paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. In summary, it's hard to get excited about Ateam from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Ateam, you should know about the other risks facing this business. Our analysis shows 4 warning signs for Ateam that we strongly recommend you have a look at before investing in the company.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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

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