GMO GlobalSign Holdings K.K. (TSE:3788) Will Pay A JP¥49.84 Dividend In Three Days
Readers hoping to buy GMO GlobalSign Holdings K.K. (TSE:3788) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. This means that investors who purchase GMO GlobalSign Holdings K.K's shares on or after the 29th of December will not receive the dividend, which will be paid on the 24th of March.
The company's next dividend payment will be JP¥49.84 per share, on the back of last year when the company paid a total of JP¥49.84 to shareholders. Based on the last year's worth of payments, GMO GlobalSign Holdings K.K stock has a trailing yield of around 2.1% on the current share price of JP¥2392.00. If you buy this business for its dividend, you should have an idea of whether GMO GlobalSign Holdings K.K's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Fortunately GMO GlobalSign Holdings K.K's payout ratio is modest, at just 42% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that GMO GlobalSign Holdings K.K'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.
View our latest analysis for GMO GlobalSign Holdings K.K
Click here to see how much of its profit GMO GlobalSign Holdings K.K paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that GMO GlobalSign Holdings K.K's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. GMO GlobalSign Holdings K.K has delivered an average of 14% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Has GMO GlobalSign Holdings K.K got what it takes to maintain its dividend payments? Its earnings per share are effectively flat in recent times. The company paid out less than half its income and more than half its cash flow as dividends to shareholders. All things considered, we are not particularly enthused about GMO GlobalSign Holdings K.K from a dividend perspective.
Keen to explore more data on GMO GlobalSign Holdings K.K's financial performance? Check out our visualisation of its historical revenue and earnings growth.
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.