Why You Might Be Interested In Nissan Tokyo Sales Holdings Co., Ltd. (TSE:8291) For Its Upcoming Dividend

Readers hoping to buy Nissan Tokyo Sales Holdings Co., Ltd. (TSE:8291) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Nissan Tokyo Sales Holdings' shares before the 28th of March in order to receive the dividend, which the company will pay on the 21st of June.

The company's upcoming dividend is JP¥13.00 a share, following on from the last 12 months, when the company distributed a total of JP¥19.00 per share to shareholders. Looking at the last 12 months of distributions, Nissan Tokyo Sales Holdings has a trailing yield of approximately 3.1% on its current stock price of JP¥615.00. If you buy this business for its dividend, you should have an idea of whether Nissan Tokyo Sales Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Nissan Tokyo Sales Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Nissan Tokyo Sales Holdings

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. Nissan Tokyo Sales Holdings has a low and conservative payout ratio of just 23% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 26% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Nissan Tokyo Sales Holdings'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 Nissan Tokyo Sales Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Nissan Tokyo Sales Holdings has grown its earnings rapidly, up 26% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Nissan Tokyo Sales Holdings has lifted its dividend by approximately 17% 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.

To Sum It Up

Has Nissan Tokyo Sales Holdings got what it takes to maintain its dividend payments? Nissan Tokyo Sales Holdings has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Nissan Tokyo Sales Holdings looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Nissan Tokyo Sales Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for Nissan Tokyo Sales Holdings that you should be aware of before investing in their shares.

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.