Be Sure To Check Out CELSYS, Inc. (TSE:3663) 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 CELSYS, Inc. (TSE:3663) 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase CELSYS' shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 30th of September.

The company's next dividend payment will be JP¥22.00 per share, on the back of last year when the company paid a total of JP¥26.00 to shareholders. Looking at the last 12 months of distributions, CELSYS has a trailing yield of approximately 1.7% on its current stock price of JP¥1521.00. If you buy this business for its dividend, you should have an idea of whether CELSYS's dividend is reliable and sustainable. As a result, readers should always check whether CELSYS 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. CELSYS paid out more than half (54%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 26% of the free cash flow it generated, which is a comfortable payout ratio.

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.

View our latest analysis for CELSYS

Click here to see how much of its profit CELSYS 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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see CELSYS's earnings have been skyrocketing, up 42% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, CELSYS could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past nine years, CELSYS has increased its dividend at approximately 48% 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.

Final Takeaway

Is CELSYS worth buying for its dividend? We like CELSYS's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. CELSYS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Want to learn more about CELSYS? Here's a visualisation of its historical rate of revenue and earnings growth.

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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.