There's A Lot To Like About Toukei Computer's (TSE:4746) Upcoming JP¥86.50 Dividend

Toukei Computer Co., Ltd. (TSE:4746) stock is about to trade ex-dividend in 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Toukei Computer's shares on or after the 29th of June, you won't be eligible to receive the dividend, when it is paid on the 1st of September.

The company's next dividend payment will be JP¥86.50 per share, on the back of last year when the company paid a total of JP¥173 to shareholders. Based on the last year's worth of payments, Toukei Computer has a trailing yield of 4.0% on the current stock price of JP¥4345.00. 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 Toukei Computer has been able to grow its dividends, or if the dividend might be cut.

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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. Toukei Computer 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. Fortunately, it paid out only 41% of its free cash flow in the past year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

See our latest analysis for Toukei Computer

Click here to see how much of its profit Toukei Computer 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. For this reason, we're glad to see Toukei Computer's earnings per share have risen 18% per annum over the last five years. Toukei Computer has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of 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. In the last 10 years, Toukei Computer has lifted its dividend by approximately 19% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

From a dividend perspective, should investors buy or avoid Toukei Computer? Toukei Computer's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. There's a lot to like about Toukei Computer, and we would prioritise taking a closer look at it.

Keen to explore more data on Toukei Computer's financial performance? Check out our visualisation of its historical revenue and earnings growth.

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