Regular readers will know that we love our dividends at Simply Wall St, which is why it is exciting to see Nippon BS Broadcasting Corporation (TSE:9414) will trade ex-dividend for the next 3 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. It is important to know the ex-dividend date because any trade in the stock must have taken place on or before the record date. So if you purchase Nippon BS Broadcasting shares on or after August 29th, you will not be eligible to receive the dividend when it is paid on November 18th.

The company’s next dividend payment will be JP¥30.00 per share. Over the last year, the company paid out a total of JP¥30.00 to shareholders. Last year’s total dividend payments show that Nippon BS Broadcasting has a yield of 3.3% on the current share price of JP¥910.00. We like to see companies pay a dividend, but it’s also important to make sure that laying golden eggs doesn’t kill our golden goose! So we need to check if dividend payments are covered and if earnings are growing.

Check out our latest analysis for Nippon BS Broadcasting

Dividends are usually paid out of company profits, so if a company pays out more than it earns, its dividend is usually at higher risk of being cut. That’s why it’s good to see Nippon BS Broadcasting paying out a modest 34% of its profits. A useful second check can be to assess whether Nippon BS Broadcasting generated enough free cash flow to afford its dividend. Fortunately, dividend payments only accounted for 30% of the free cash flow generated, which is a comfortable payout ratio.

It’s positive to see that Nippon BS Broadcasting’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 means a greater margin of safety before the dividend gets cut.

Click here to see how much profit Nippon BS Broadcasting paid out over the past 12 months.

Have earnings and dividends increased?

When earnings fall, dividend-paying companies become much harder to analyze and hold safely. Investors love dividends, so when earnings fall and the dividend is cut, expect the stock to be massively sold off at the same time. That’s why it’s not ideal that Nippon BS Broadcasting’s earnings per share have shrunk by 3.9% annually over the past five years.

Many investors judge a company’s dividend performance by looking at how dividend payments have changed over time. Since we began collecting data six years ago, Nippon BS Broadcasting has increased its dividend by an average of 7.9% annually.

Last Takeaway

Is it worth buying Nippon BS Broadcasting for its dividend? 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 earnings fall, but at least there might be a buffer before the dividend has to be cut. All in all, we’re not particularly excited about Nippon BS Broadcasting from a dividend perspective.

Although Nippon BS Broadcasting looks good from a dividend perspective, it is always worth staying up to date on the risks associated with this stock. For example, we found 1 warning sign for Nippon BS Broadcasting that you should consider before investing in the company.

A common mistake when investing is to buy the first interesting stock you see. Here you can find a complete list of high 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.