Happiness and D Co.,Ltd. (TSE:3174) Goes Ex-Dividend Soon

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 Happiness and D Co.,Ltd. (TSE:3174) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Happiness and DLtd's shares before the 27th of February in order to be eligible for the dividend, which will be paid on the 7th of May.

The company's upcoming dividend is JP¥7.50 a share, following on from the last 12 months, when the company distributed a total of JP¥15.00 per share to shareholders. Based on the last year's worth of payments, Happiness and DLtd has a trailing yield of 2.0% on the current stock price of JP¥738.00. 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 investigate whether Happiness and DLtd can afford its dividend, and if the dividend could grow.

View our latest analysis for Happiness and DLtd

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Happiness and DLtd's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out 5.9% of its free cash flow as dividends last year, which is conservatively low.

Click here to see how much of its profit Happiness and DLtd 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. Happiness and DLtd was unprofitable last year, although, we can see that at least its loss per share reduced by 38% on the previous year.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Given that Happiness and DLtd has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Remember, you can always get a snapshot of Happiness and DLtd's financial health, by checking our visualisation of its financial health, here.

Final Takeaway

Is Happiness and DLtd an attractive dividend stock, or better left on the shelf? It's hard to get used to Happiness and DLtd paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. In summary, it's hard to get excited about Happiness and DLtd from a dividend perspective.

In light of that, while Happiness and DLtd has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 4 warning signs we've spotted with Happiness and DLtd (including 1 which shouldn't be ignored).

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.