Don't Race Out To Buy HIMARAYA Co.,Ltd. (TSE:7514) Just Because It's Going Ex-Dividend
HIMARAYA Co.,Ltd. (TSE:7514) stock is about to trade ex-dividend in 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. 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. Accordingly, HIMARAYALtd investors that purchase the stock on or after the 28th of August will not receive the dividend, which will be paid on the 27th of November.
The company's next dividend payment will be JP¥13.00 per share. Last year, in total, the company distributed JP¥26.00 to shareholders. Looking at the last 12 months of distributions, HIMARAYALtd has a trailing yield of approximately 3.0% on its current stock price of JP¥881.00. 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.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. HIMARAYALtd's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If HIMARAYALtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out an unsustainably high 203% of its free cash flow as dividends over the past 12 months, which is worrying. Our definition of free cash flow excludes cash generated from asset sales, so since HIMARAYALtd is paying out such a high percentage of its cash flow, it might be worth seeing if it sold assets or had similar events that might have led to such a high dividend payment.
Check out our latest analysis for HIMARAYALtd
Click here to see how much of its profit HIMARAYALtd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. HIMARAYALtd reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, HIMARAYALtd has lifted its dividend by approximately 2.7% a year on average.
We update our analysis on HIMARAYALtd every 24 hours, so you can always get the latest insights on its financial health, here.
To Sum It Up
Should investors buy HIMARAYALtd for the upcoming dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Second, the dividend was not well covered by cash flow." With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of HIMARAYALtd.
With that being said, if you're still considering HIMARAYALtd as an investment, you'll find it beneficial to know what risks this stock is facing. For example, HIMARAYALtd has 3 warning signs (and 2 which are concerning) we think you should know about.
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.