Be Sure To Check Out Synclayer Inc. (TYO:1724) Before It Goes Ex-Dividend

Synclayer Inc. (TYO:1724) stock is about to trade ex-dividend in 4 days. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 30th of March.

Synclayer's next dividend payment will be JP¥6.00 per share, and in the last 12 months, the company paid a total of JP¥10.00 per share. Calculating the last year's worth of payments shows that Synclayer has a trailing yield of 1.3% on the current share price of ¥769. If you buy this business for its dividend, you should have an idea of whether Synclayer's dividend is reliable and sustainable. So we need to investigate whether Synclayer can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Synclayer

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Synclayer paid out just 6.2% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. The good news is it paid out just 9.9% of its free cash flow in the last year.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Synclayer has grown its earnings rapidly, up 52% a year for the past five years. Synclayer earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Synclayer has increased its dividend at approximately 5.2% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Synclayer is keeping back more of its profits to grow the business.

To Sum It Up

Is Synclayer worth buying for its dividend? It's great that Synclayer is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Synclayer is facing. For example, we've found 4 warning signs for Synclayer that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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