GMO GlobalSign Holdings K.K. (TSE:3788) Is About To Go Ex-Dividend, And It Pays A 1.5% Yield

It looks like GMO GlobalSign Holdings K.K. (TSE:3788) is about to go ex-dividend in the next three 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, GMO GlobalSign Holdings K.K investors that purchase the stock on or after the 27th of December will not receive the dividend, which will be paid on the 25th of March.

The company's next dividend payment will be JP¥36.47 per share. Last year, in total, the company distributed JP¥36.47 to shareholders. Last year's total dividend payments show that GMO GlobalSign Holdings K.K has a trailing yield of 1.5% on the current share price of JP¥2403.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for GMO GlobalSign Holdings K.K

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. GMO GlobalSign Holdings K.K is paying out an acceptable 64% of its profit, a common payout level among most companies. 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. It distributed 45% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that GMO GlobalSign Holdings K.K'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 GMO GlobalSign Holdings K.K paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see GMO GlobalSign Holdings K.K's earnings per share have dropped 6.3% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, GMO GlobalSign Holdings K.K has lifted its dividend by approximately 6.5% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

Final Takeaway

Should investors buy GMO GlobalSign Holdings K.K for the upcoming dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

If you're not too concerned about GMO GlobalSign Holdings K.K's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Every company has risks, and we've spotted 1 warning sign for GMO GlobalSign Holdings K.K you should know about.

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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.