Enjin Co., Ltd. (TSE:7370) Stock Goes Ex-Dividend In Just Four Days

Readers hoping to buy Enjin Co., Ltd. (TSE:7370) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important as the process of settlement involves at least 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 Enjin's shares before the 29th of May in order to be eligible for the dividend, which will be paid on the 26th of August.

The company's next dividend payment will be JP¥25.00 per share, on the back of last year when the company paid a total of JP¥38.00 to shareholders. Calculating the last year's worth of payments shows that Enjin has a trailing yield of 4.9% on the current share price of JP¥770.00. If you buy this business for its dividend, you should have an idea of whether Enjin's dividend is reliable and sustainable. So we need to investigate whether Enjin can afford its dividend, and if the dividend could grow.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Enjin paying out a modest 48% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Enjin'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 Enjin

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Enjin has delivered 13% dividend growth per year on average over the past three years.

To Sum It Up

Has Enjin got what it takes to maintain its dividend payments? Enjin 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. To summarise, Enjin looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in Enjin for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 3 warning signs for Enjin you should know about.

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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.