SMS Co., Ltd. (TSE:2175) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

SMS Co., Ltd. (TSE:2175) is about to trade ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase SMS' shares before the 30th of March in order to receive the dividend, which the company will pay on the 23rd of June. The company's next dividend payment will be JP¥29.50 per share, and in the last 12 months, the company paid a total of JP¥29.50 per share. Based on the last year's worth of payments, SMS stock has a trailing yield of around 1.8% on the current share price of JP¥1646.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see SMS paying out a modest 35% of its earnings. A useful secondary check can be to evaluate whether SMS generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (84%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business. It's positive to see that SMS'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 SMS Click here to see the company's payout ratio, plus analyst estimates of its future dividends. TSE:2175 Historic Dividend March 25th 2026 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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at SMS, with earnings per share up 8.9% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing. Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, SMS has lifted its dividend by approximately 24% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders. To Sum It Up Is SMS an attractive dividend stock, or better left on the shelf? Earnings per share growth has been modest, and it's interesting that SMS is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there. So while SMS looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 2 warning signs for SMS and you should be aware of these before buying any shares. Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers. New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for Free