LIGHTWORKS Corporation (TSE:4267) Goes Ex-Dividend Soon

LIGHTWORKS Corporation (TSE:4267) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Meaning, you will need to purchase LIGHTWORKS' shares before the 30th of January to receive the dividend, which will be paid on the 28th of April.

The company's next dividend payment will be JP¥33.00 per share. Last year, in total, the company distributed JP¥44.00 to shareholders. Based on the last year's worth of payments, LIGHTWORKS stock has a trailing yield of around 3.4% on the current share price of JP¥1304.00. If you buy this business for its dividend, you should have an idea of whether LIGHTWORKS's dividend is reliable and sustainable. As a result, readers should always check whether LIGHTWORKS has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for LIGHTWORKS

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. LIGHTWORKS paid out 106% of its earnings, which is more than we're comfortable with, unless there are mitigating 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. Luckily it paid out just 22% of its free cash flow last year.

It's good to see that while LIGHTWORKS's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Click here to see how much of its profit LIGHTWORKS 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see LIGHTWORKS's earnings have been skyrocketing, up 36% per annum for the past five years.

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, two years ago, LIGHTWORKS has lifted its dividend by approximately 110% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Should investors buy LIGHTWORKS for the upcoming dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why LIGHTWORKS is paying out so much of its profit. To summarise, LIGHTWORKS looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So while LIGHTWORKS looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for LIGHTWORKS you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.