Just Three Days Till TAUNS Laboratories,Inc. (TSE:197A) Will Be Trading Ex-Dividend

TAUNS Laboratories,Inc. (TSE:197A) is about to trade ex-dividend in the next 3 days. 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase TAUNS LaboratoriesInc's shares before the 29th of December in order to receive the dividend, which the company will pay on the 13th of March.

The company's next dividend payment will be JP¥14.00 per share, and in the last 12 months, the company paid a total of JP¥28.00 per share. Last year's total dividend payments show that TAUNS LaboratoriesInc has a trailing yield of 5.4% on the current share price of JP¥516.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

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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. That's why it's good to see TAUNS LaboratoriesInc paying out a modest 46% of its earnings. 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. Over the past year it paid out 164% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

TAUNS LaboratoriesInc paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to TAUNS LaboratoriesInc's ability to maintain its dividend.

Check out our latest analysis for TAUNS LaboratoriesInc

Click here to see how much of its profit TAUNS LaboratoriesInc paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 4.9% over the past 12 months. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Unfortunately TAUNS LaboratoriesInc has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is TAUNS LaboratoriesInc an attractive dividend stock, or better left on the shelf? TAUNS LaboratoriesInc delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 164% of its cash flow over the last year, which is a mediocre outcome. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of TAUNS LaboratoriesInc's dividend merits.

So if you want to do more digging on TAUNS LaboratoriesInc, you'll find it worthwhile knowing the risks that this stock faces. For example - TAUNS LaboratoriesInc has 2 warning signs we think you should be aware of.

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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.