Business Brain Showa-Ota Inc. (TSE:9658) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Readers hoping to buy Business Brain Showa-Ota Inc. (TSE:9658) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. Therefore, if you purchase Business Brain Showa-Ota's shares on or after the 29th of September, you won't be eligible to receive the dividend, when it is paid on the 30th of November.
The company's next dividend payment will be JP¥23.50 per share, and in the last 12 months, the company paid a total of JP¥47.00 per share. Based on the last year's worth of payments, Business Brain Showa-Ota stock has a trailing yield of around 4.2% on the current share price of JP¥1117.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Business Brain Showa-Ota has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Business Brain Showa-Ota paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies. 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. It distributed 29% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Business Brain Showa-Ota'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.
See our latest analysis for Business Brain Showa-Ota
Click here to see how much of its profit Business Brain Showa-Ota 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, Business Brain Showa-Ota's earnings per share have been growing at 13% a year for the past five years. Business Brain Showa-Ota has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Business Brain Showa-Ota has lifted its dividend by approximately 28% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
Final Takeaway
Should investors buy Business Brain Showa-Ota for the upcoming dividend? We like Business Brain Showa-Ota's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. There's a lot to like about Business Brain Showa-Ota, and we would prioritise taking a closer look at it.
Want to learn more about Business Brain Showa-Ota? Here's a visualisation of its historical rate of revenue and earnings growth.
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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.