Some investors rely on dividends to grow their wealth. If you are one of these dividend detectives, you might be interested to know that World Co., Ltd. (TSE:3612) will trade ex-dividend in just 4 days. The ex-dividend date is one day before the record date, which is the date on which shareholders must be on the company’s books to receive a dividend. The ex-dividend date is an important date to keep an eye on, as any purchase of the shares on or after this date may mean a delayed settlement that will no longer be reflected on the record date. So you can buy shares of World before August 29th in order to receive the dividend that the company will pay on January 1st.
The company’s next dividend payment will be JP¥37.00 per share. Last year, the company paid out a total of JP¥75.00 to shareholders. Last year’s total dividend payments show that World has a trailing yield of 3.7% on the current share price of JP¥2023.00. If you are buying this company for its dividend, you should have an idea of whether World’s dividend is reliable and sustainable. We need to see if the dividend is covered by earnings and if it is growing.
Check out our latest analysis for the world
Dividends are usually paid out of company profits, so if a company pays out more than it earns, there is usually a higher risk that its dividend will be cut. Fortunately, World’s payout ratio is modest, at just 35% of profits. However, even highly profitable companies sometimes don’t generate enough money to pay the dividend, so we should always check if the dividend is covered by cash flow. On the positive side, dividends were well covered by free cash flow. The company paid out 8.0% of its cash flow last year.
It’s positive to see that World’s dividend is covered by both profits and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout ratio usually indicates a greater margin of safety before the dividend gets cut.
Click here to see how much of its winnings World has paid out over the past 12 months.
Have earnings and dividends increased?
When earnings fall, high dividend companies become much harder to analyze and hold safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we are concerned about World’s 13% annual earnings decline over the past five years. When earnings per share fall, the maximum dividend amount that can be paid also falls.
Most investors judge a company’s dividend prospects primarily based on its historical dividend growth rate. Over the past five years, World has increased its dividend by an average of about 1.7% per year.
Last Takeaway
Does World have what it takes to maintain its dividend payments? Earnings per share have fallen significantly, although the company is at least paying out a low and conservative percentage of both its earnings and cash flow. It’s definitely not nice to see declining earnings, but at least there’s a cushion before the dividend has to be cut. Overall, it’s hard to get excited about World from a dividend perspective.
With this in mind, you should research the risks World is exposed to. In terms of investment risks, We have identified 2 warning signs with the world and its understanding should be part of your investment process.
If you are looking for strong dividend payers, we recommend Check out our selection of the highest dividend stocks.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
