Four Days Left To Buy Taiyo Technolex Co.,Ltd. (TSE:6663) Before The Ex-Dividend Date

Taiyo Technolex Co.,Ltd. (TSE:6663) stock is about to trade ex-dividend in four 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Taiyo TechnolexLtd's shares before the 18th of December in order to receive the dividend, which the company will pay on the 19th of March.

The company's next dividend payment will be JP¥6.00 per share, and in the last 12 months, the company paid a total of JP¥3.00 per share. Calculating the last year's worth of payments shows that Taiyo TechnolexLtd has a trailing yield of 1.2% on the current share price of JP¥255.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Taiyo TechnolexLtd has been able to grow its dividends, or if the dividend might be cut.

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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. Taiyo TechnolexLtd lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Taiyo TechnolexLtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out 20% of its free cash flow as dividends last year, which is conservatively low.

See our latest analysis for Taiyo TechnolexLtd

Click here to see how much of its profit Taiyo TechnolexLtd 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. Taiyo TechnolexLtd was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Taiyo TechnolexLtd dividends are largely the same as they were 10 years ago.

We update our analysis on Taiyo TechnolexLtd every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Taiyo TechnolexLtd? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." In summary, while it has some positive characteristics, we're not inclined to race out and buy Taiyo TechnolexLtd today.

On that note, you'll want to research what risks Taiyo TechnolexLtd is facing. For example, we've found 1 warning sign for Taiyo TechnolexLtd that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.