Be Sure To Check Out Treasure Factory Co.,LTD. (TSE:3093) Before It Goes Ex-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 Treasure Factory Co.,LTD. (TSE:3093) is about to go ex-dividend in just 4 days. The ex-dividend date is commonly two business days 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 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. Accordingly, Treasure FactoryLTD investors that purchase the stock on or after the 28th of August will not receive the dividend, which will be paid on the 4th of November.

The company's next dividend payment will be JP¥19.00 per share, and in the last 12 months, the company paid a total of JP¥39.00 per share. Looking at the last 12 months of distributions, Treasure FactoryLTD has a trailing yield of approximately 2.2% on its current stock price of JP¥1805.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Treasure FactoryLTD paid out a comfortable 29% of its profit last year. 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. It paid out more than half (56%) 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.

Check out our latest analysis for Treasure FactoryLTD

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Treasure FactoryLTD's earnings have been skyrocketing, up 39% 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, Treasure FactoryLTD has lifted its dividend by approximately 22% 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.

The Bottom Line

From a dividend perspective, should investors buy or avoid Treasure FactoryLTD? Earnings per share have grown at a nice rate in recent times and over the last year, Treasure FactoryLTD paid out less than half its earnings and a bit over half its free cash flow. Treasure FactoryLTD looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Treasure FactoryLTD for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for Treasure FactoryLTD you should know about.

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.