Interested In NIFTY Lifestyle's (TSE:4262) Upcoming JP¥9.00 Dividend? You Have Three Days Left

It looks like NIFTY Lifestyle Co., Ltd. (TSE:4262) is about to go ex-dividend in the next 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase NIFTY Lifestyle's shares before the 27th of September in order to receive the dividend, which the company will pay on the 5th of December.

The company's next dividend payment will be JP¥9.00 per share, on the back of last year when the company paid a total of JP¥18.00 to shareholders. Calculating the last year's worth of payments shows that NIFTY Lifestyle has a trailing yield of 2.1% on the current share price of JP¥842.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether NIFTY Lifestyle has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for NIFTY Lifestyle

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. NIFTY Lifestyle paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether NIFTY Lifestyle generated enough free cash flow to afford its dividend. Luckily it paid out just 12% 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 NIFTY Lifestyle 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. So we're not too excited that NIFTY Lifestyle's earnings are down 2.7% a year over the past five years.

Given that NIFTY Lifestyle has only been paying a dividend for a year, there's not much of a past history to draw insight from.

To Sum It Up

Has NIFTY Lifestyle got what it takes to maintain its dividend payments? NIFTY Lifestyle 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. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 3 warning signs for NIFTY Lifestyle 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.

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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.