Here's What We Like About Hashimoto Sogyo HoldingsLtd's (TSE:7570) Upcoming Dividend
Readers hoping to buy Hashimoto Sogyo Holdings Co.,Ltd. (TSE:7570) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Accordingly, Hashimoto Sogyo HoldingsLtd investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 9th of December.
The company's next dividend payment will be JP¥26.00 per share, and in the last 12 months, the company paid a total of JP¥52.00 per share. Based on the last year's worth of payments, Hashimoto Sogyo HoldingsLtd stock has a trailing yield of around 3.7% on the current share price of JP¥1409.00. If you buy this business for its dividend, you should have an idea of whether Hashimoto Sogyo HoldingsLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's 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 Hashimoto Sogyo HoldingsLtd's payout ratio is modest, at just 32% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 37% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Hashimoto Sogyo HoldingsLtd'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.
See our latest analysis for Hashimoto Sogyo HoldingsLtd
Click here to see how much of its profit Hashimoto Sogyo HoldingsLtd 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Hashimoto Sogyo HoldingsLtd, with earnings per share up 6.9% on average over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Hashimoto Sogyo HoldingsLtd has lifted its dividend by approximately 14% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Should investors buy Hashimoto Sogyo HoldingsLtd for the upcoming dividend? Earnings per share growth has been growing somewhat, and Hashimoto Sogyo HoldingsLtd 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 Hashimoto Sogyo HoldingsLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about Hashimoto Sogyo HoldingsLtd, and we would prioritise taking a closer look at it.
So while Hashimoto Sogyo HoldingsLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. We've identified 2 warning signs with Hashimoto Sogyo HoldingsLtd (at least 1 which doesn't sit too well with us), and understanding them should be part of your investment process.
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.