Care Twentyone Corporation (TSE:2373) Is About To Go Ex-Dividend, And It Pays A 4.1% Yield
It looks like Care Twentyone Corporation (TSE:2373) is about to go ex-dividend in the next three 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Care Twentyone's shares on or after the 29th of October will not receive the dividend, which will be paid on the 30th of January.
The company's next dividend payment will be JP¥10.00 per share, on the back of last year when the company paid a total of JP¥17.00 to shareholders. Based on the last year's worth of payments, Care Twentyone stock has a trailing yield of around 4.1% on the current share price of JP¥417.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Care Twentyone has been able to grow its dividends, or if the dividend might be cut.
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. Care Twentyone paid out a comfortable 47% of its profit last year. 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. Luckily it paid out just 18% of its free cash flow last year.
It's positive to see that Care Twentyone'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 Care Twentyone
Click here to see how much of its profit Care Twentyone paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Care Twentyone's earnings per share have fallen at approximately 17% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Care Twentyone has delivered 5.4% dividend growth per year on average over the past 10 years.
To Sum It Up
Should investors buy Care Twentyone for the upcoming dividend? Care Twentyone has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, it's hard to get excited about Care Twentyone from a dividend perspective.
In light of that, while Care Twentyone has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 6 warning signs we've spotted with Care Twentyone (including 2 which are significant).
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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