Bushiroad Inc. (TSE:7803) Goes Ex-Dividend Soon

Bushiroad Inc. (TSE:7803) is about to trade ex-dividend in the next two days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Thus, you can purchase Bushiroad's shares before the 27th of June in order to receive the dividend, which the company will pay on the 27th of September.

The company's next dividend payment will be JP¥4.50 per share, on the back of last year when the company paid a total of JP¥4.50 to shareholders. Looking at the last 12 months of distributions, Bushiroad has a trailing yield of approximately 1.2% on its current stock price of JP¥371.00. If you buy this business for its dividend, you should have an idea of whether Bushiroad's dividend is reliable and sustainable. As a result, readers should always check whether Bushiroad has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Bushiroad

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. Fortunately Bushiroad's payout ratio is modest, at just 41% of profit. A useful secondary check can be to evaluate whether Bushiroad generated enough free cash flow to afford its dividend. It paid out more than half (68%) of its free cash flow in the past year, which is within an average range for most companies.

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 Bushiroad 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Bushiroad's 18% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Bushiroad has delivered 6.1% dividend growth per year on average over the past two years.

Final Takeaway

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

If you want to look further into Bushiroad, it's worth knowing the risks this business faces. For example, we've found 2 warning signs for Bushiroad 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.

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