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DYNAM JAPAN HOLDINGS Co., Ltd. (HKG:6889) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 6th of December will not receive this dividend, which will be paid on the 10th of January.
DYNAM JAPAN HOLDINGS's next dividend payment will be HK$0.43 per share, and in the last 12 months, the company paid a total of HK$12.00 per share. Looking at the last 12 months of distributions, DYNAM JAPAN HOLDINGS has a trailing yield of approximately 8.2% on its current stock price of HK$10.5. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for DYNAM JAPAN HOLDINGS
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. DYNAM JAPAN HOLDINGS is paying out an acceptable 71% of its profit, a common payout level among 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 paid out more than half (58%) of its free cash flow in the past year, which is within an average range for most companies.
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.
Click here to see how much of its profit DYNAM JAPAN HOLDINGS paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see DYNAM JAPAN HOLDINGS's earnings per share have dropped 10.0% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, seven years ago, DYNAM JAPAN HOLDINGS has lifted its dividend by approximately 0.6% a year on average.
The Bottom Line
Is DYNAM JAPAN HOLDINGS worth buying for its dividend? While earnings per share are shrinking, it's encouraging to see that at least DYNAM JAPAN HOLDINGS's dividend appears sustainable, with earnings and cashflow payout ratios that are within reasonable bounds. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.