Be Sure To Check Out SUNNEXTA GROUP Inc. (TSE:8945) Before It Goes Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see SUNNEXTA GROUP Inc. (TSE:8945) is about to trade ex-dividend in the next 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase SUNNEXTA GROUP'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¥19.00 per share, on the back of last year when the company paid a total of JP¥38.00 to shareholders. Based on the last year's worth of payments, SUNNEXTA GROUP stock has a trailing yield of around 3.6% on the current share price of JP¥1051.00. If you buy this business for its dividend, you should have an idea of whether SUNNEXTA GROUP's dividend is reliable and sustainable. So we need to investigate whether SUNNEXTA GROUP can afford its dividend, and if the dividend could grow.

Check out our latest analysis for SUNNEXTA GROUP

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. SUNNEXTA GROUP is paying out just 8.6% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that SUNNEXTA GROUP'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 SUNNEXTA GROUP paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see SUNNEXTA GROUP's earnings have been skyrocketing, up 30% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, SUNNEXTA GROUP has lifted its dividend by approximately 15% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Is SUNNEXTA GROUP an attractive dividend stock, or better left on the shelf? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. SUNNEXTA GROUP looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while SUNNEXTA GROUP looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 2 warning signs with SUNNEXTA GROUP and understanding them should be part of your investment process.

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.

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