Be Sure To Check Out K&O Energy Group Inc. (TSE:1663) Before It Goes Ex-Dividend

It looks like K&O Energy Group Inc. (TSE:1663) 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. Meaning, you will need to purchase K&O Energy Group's shares before the 27th of June to receive the dividend, which will be paid on the 2nd of September.

The company's upcoming dividend is JP¥20.00 a share, following on from the last 12 months, when the company distributed a total of JP¥40.00 per share to shareholders. Looking at the last 12 months of distributions, K&O Energy Group has a trailing yield of approximately 1.2% on its current stock price of JP¥3460.00. If you buy this business for its dividend, you should have an idea of whether K&O Energy Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for K&O Energy Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. K&O Energy Group is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether K&O Energy Group generated enough free cash flow to afford its dividend. The good news is it paid out just 19% of its free cash flow in the last year.

It's positive to see that K&O Energy Group'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 K&O Energy Group 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see K&O Energy Group's earnings have been skyrocketing, up 24% per annum for the past five years. K&O Energy Group earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. K&O Energy Group has delivered 4.4% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because K&O Energy Group is keeping back more of its profits to grow the business.

To Sum It Up

Is K&O Energy Group worth buying for its dividend? We love that K&O Energy Group is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in K&O Energy Group for the dividends alone, you should always be mindful of the risks involved. For example - K&O Energy Group has 2 warning signs we think you should be aware of.

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.

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