Kurashicom Inc. (TSE:7110) Passed Our Checks, And It's About To Pay A JP¥55.00 Dividend
Kurashicom Inc. (TSE:7110) stock is about to trade ex-dividend in 2 days. The ex-dividend date is commonly two business days 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Kurashicom's shares on or after the 30th of July, you won't be eligible to receive the dividend, when it is paid on the 30th of October.
The company's next dividend payment will be JP¥55.00 per share, and in the last 12 months, the company paid a total of JP¥55.00 per share. Calculating the last year's worth of payments shows that Kurashicom has a trailing yield of 2.7% on the current share price of JP¥2050.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Kurashicom's payout ratio is modest, at just 33% 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. Luckily it paid out just 13% of its free cash flow last year.
It's positive to see that Kurashicom'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.
Check out our latest analysis for Kurashicom
Click here to see how much of its profit Kurashicom paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why we're glad to see earnings per share up 6.2% over the past 12 months. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.
One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Kurashicom has delivered 6.9% dividend growth per year on average over the past three years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Is Kurashicom an attractive dividend stock, or better left on the shelf? Earnings per share growth has been growing somewhat, and Kurashicom 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 Kurashicom is being conservative with its dividend payouts and could still perform reasonably over the long run. Kurashicom looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
So while Kurashicom looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 3 warning signs for Kurashicom that you should be aware of before investing in their shares.
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.