Be Sure To Check Out Vt Holdings Co.,Ltd. (TSE:7593) 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 Vt Holdings Co.,Ltd. (TSE:7593) is about to trade ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, 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 can take two business days or more to settle. Accordingly, Vt HoldingsLtd investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 11th of June.

The company's upcoming dividend is JP¥12.00 a share, following on from the last 12 months, when the company distributed a total of JP¥24.00 per share to shareholders. Based on the last year's worth of payments, Vt HoldingsLtd has a trailing yield of 4.7% on the current stock price of JP¥511.00. If you buy this business for its dividend, you should have an idea of whether Vt HoldingsLtd's dividend is reliable and sustainable. As a result, readers should always check whether Vt HoldingsLtd has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Vt HoldingsLtd paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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 25% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Vt HoldingsLtd'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.

Check out our latest analysis for Vt HoldingsLtd

Click here to see how much of its profit Vt HoldingsLtd 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Vt HoldingsLtd, with earnings per share up 9.5% on average over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Vt HoldingsLtd has delivered 5.5% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Vt HoldingsLtd an attractive dividend stock, or better left on the shelf? Earnings per share have been growing moderately, and Vt HoldingsLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Vt HoldingsLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about Vt HoldingsLtd, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Vt HoldingsLtd is facing. For example - Vt HoldingsLtd has 1 warning sign we think you should be aware of.

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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.