Three Days Left Until Chubu Electric Power Company, Incorporated (TSE:9502) Trades Ex-Dividend
Chubu Electric Power Company, Incorporated (TSE:9502) 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 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, Chubu Electric Power Company investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 30th of November.
The company's upcoming dividend is JP¥35.00 a share, following on from the last 12 months, when the company distributed a total of JP¥70.00 per share to shareholders. Based on the last year's worth of payments, Chubu Electric Power Company has a trailing yield of 2.4% on the current stock price of JP¥2869.00. 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 Chubu Electric Power Company 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. That's why it's good to see Chubu Electric Power Company paying out a modest 30% of its earnings. A useful secondary check can be to evaluate whether Chubu Electric Power Company generated enough free cash flow to afford its dividend. Over the last year, it paid out dividends equivalent to 235% of what it generated in free cash flow, a disturbingly high percentage. It's pretty hard to pay out more than you earn, so we wonder how Chubu Electric Power Company intends to continue funding this dividend, or if it could be forced to cut the payment.
While Chubu Electric Power Company's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Chubu Electric Power Company to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Check out our latest analysis for Chubu Electric Power Company
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Chubu Electric Power Company, with earnings per share up 3.9% on average over the last five years. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Chubu Electric Power Company has increased its dividend at approximately 13% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Chubu Electric Power Company an attractive dividend stock, or better left on the shelf? Chubu Electric Power Company delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 235% of its cash flow over the last year, which is a mediocre outcome. Overall, it's hard to get excited about Chubu Electric Power Company from a dividend perspective.
If you want to look further into Chubu Electric Power Company, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Chubu Electric Power Company (of which 1 is potentially serious!) you should know about.
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.