Only Three Days Left To Cash In On Urbanet CorporationLtd's (TSE:3242) Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Urbanet Corporation Co.,Ltd. (TSE:3242) is about to go ex-dividend in just three 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Urbanet CorporationLtd's shares before the 27th of December in order to be eligible for the dividend, which will be paid on the 25th of March.

The company's next dividend payment will be JP¥10.00 per share. Last year, in total, the company distributed JP¥21.00 to shareholders. Calculating the last year's worth of payments shows that Urbanet CorporationLtd has a trailing yield of 4.7% on the current share price of JP¥446.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Urbanet CorporationLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Urbanet CorporationLtd's payout ratio is modest, at just 49% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 22% of its free cash flow in the 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 Urbanet CorporationLtd 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. So we're not too excited that Urbanet CorporationLtd's earnings are down 4.0% a year over the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Urbanet CorporationLtd has delivered 4.6% dividend growth per year on average over the past nine years.

The Bottom Line

Is Urbanet CorporationLtd worth buying for its dividend? Urbanet CorporationLtd 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. In summary, while it has some positive characteristics, we're not inclined to race out and buy Urbanet CorporationLtd today.

On that note, you'll want to research what risks Urbanet CorporationLtd is facing. To that end, you should learn about the 4 warning signs we've spotted with Urbanet CorporationLtd (including 1 which makes us a bit uncomfortable).

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.