Medical Ikkou Group Co.,Ltd. (TSE:3353) Passed Our Checks, And It's About To Pay A JP¥60.00 Dividend
Medical Ikkou Group Co.,Ltd. (TSE:3353) is about to trade ex-dividend in the next four 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 as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Medical Ikkou GroupLtd's shares before the 28th of August in order to be eligible for the dividend, which will be paid on the 5th of November.
The company's next dividend payment will be JP¥60.00 per share, and in the last 12 months, the company paid a total of JP¥120 per share. Based on the last year's worth of payments, Medical Ikkou GroupLtd has a trailing yield of 4.2% on the current stock price of JP¥2880.00. If you buy this business for its dividend, you should have an idea of whether Medical Ikkou GroupLtd's dividend is reliable and sustainable. So we need to investigate whether Medical Ikkou GroupLtd can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Medical Ikkou GroupLtd paid out a comfortable 31% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 57% of its free cash flow as dividends, within the usual range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
See our latest analysis for Medical Ikkou GroupLtd
Click here to see how much of its profit Medical Ikkou GroupLtd 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Medical Ikkou GroupLtd's earnings per share have been growing at 12% a year for the past five years. Medical Ikkou GroupLtd has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Medical Ikkou GroupLtd has delivered 14% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Has Medical Ikkou GroupLtd got what it takes to maintain its dividend payments? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. Medical Ikkou GroupLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
While it's tempting to invest in Medical Ikkou GroupLtd for the dividends alone, you should always be mindful of the risks involved. For example - Medical Ikkou GroupLtd has 1 warning sign we think you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.