Is It Smart To Buy MITSUI-SOKO HOLDINGS Co., Ltd. (TSE:9302) Before It Goes Ex-Dividend?

It looks like MITSUI-SOKO HOLDINGS Co., Ltd. (TSE:9302) is about to go ex-dividend in the next 3 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. Therefore, if you purchase MITSUI-SOKO HOLDINGS' shares on or after the 27th of September, you won't be eligible to receive the dividend, when it is paid on the 4th of December.

The company's next dividend payment will be JP¥73.00 per share. Last year, in total, the company distributed JP¥146 to shareholders. Based on the last year's worth of payments, MITSUI-SOKO HOLDINGS has a trailing yield of 2.4% on the current stock price of JP¥6130.00. 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! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for MITSUI-SOKO HOLDINGS

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. MITSUI-SOKO HOLDINGS paid out a comfortable 32% of its profit last year. A useful secondary check can be to evaluate whether MITSUI-SOKO HOLDINGS generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 29% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that MITSUI-SOKO HOLDINGS'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 the company's payout ratio, plus analyst estimates of its future dividends.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, MITSUI-SOKO HOLDINGS's earnings per share have been growing at 17% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, MITSUI-SOKO HOLDINGS has increased its dividend at approximately 12% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is MITSUI-SOKO HOLDINGS an attractive dividend stock, or better left on the shelf? MITSUI-SOKO HOLDINGS has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. MITSUI-SOKO HOLDINGS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks MITSUI-SOKO HOLDINGS is facing. For example, we've found 1 warning sign for MITSUI-SOKO HOLDINGS 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.