Is It Smart To Buy Japan Securities Finance Co., Ltd. (TSE:8511) Before It Goes Ex-Dividend?
Japan Securities Finance Co., Ltd. (TSE:8511) is about to trade ex-dividend in the next four 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 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. Accordingly, Japan Securities Finance investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 7th of December.
The company's next dividend payment will be JP¥47.00 per share, and in the last 12 months, the company paid a total of JP¥94.00 per share. Last year's total dividend payments show that Japan Securities Finance has a trailing yield of 3.8% on the current share price of JP¥2482.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Japan Securities Finance paid out more than half (58%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
View our latest analysis for Japan Securities Finance
Click here to see how much of its profit Japan Securities Finance paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Japan Securities Finance's earnings have been skyrocketing, up 28% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Japan Securities Finance has lifted its dividend by approximately 19% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Has Japan Securities Finance got what it takes to maintain its dividend payments? Japan Securities Finance has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Japan Securities Finance ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
While it's tempting to invest in Japan Securities Finance for the dividends alone, you should always be mindful of the risks involved. Be aware that Japan Securities Finance is showing 2 warning signs in our investment analysis, and 1 of those is a bit concerning...
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.