There's A Lot To Like About Kintetsu Group HoldingsLtd's (TSE:9041) Upcoming JP¥50.00 Dividend

Kintetsu Group Holdings Co.,Ltd. (TSE:9041) is about to trade ex-dividend in the next two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Kintetsu Group HoldingsLtd investors that purchase the stock on or after the 28th of March will not receive the dividend, which will be paid on the 28th of June.

The company's upcoming dividend is JP¥50.00 a share, following on from the last 12 months, when the company distributed a total of JP¥50.00 per share to shareholders. Calculating the last year's worth of payments shows that Kintetsu Group HoldingsLtd has a trailing yield of 1.1% on the current share price of JP¥4664.00. If you buy this business for its dividend, you should have an idea of whether Kintetsu Group HoldingsLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Kintetsu Group HoldingsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kintetsu Group HoldingsLtd is paying out just 25% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Luckily it paid out just 4.4% of its free cash flow last year.

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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. This is why it's a relief to see Kintetsu Group HoldingsLtd earnings per share are up 5.5% per annum over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Kintetsu Group HoldingsLtd dividends are largely the same as they were 10 years ago.

Final Takeaway

Is Kintetsu Group HoldingsLtd an attractive dividend stock, or better left on the shelf? Earnings per share growth has been growing somewhat, and Kintetsu Group HoldingsLtd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Kintetsu Group HoldingsLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. Kintetsu Group HoldingsLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Kintetsu Group HoldingsLtd has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for Kintetsu Group HoldingsLtd (1 is concerning!) that you ought to be aware of before buying the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.