Regular readers know that we at Simply Wall St are big on dividends. That's why we're excited to see Suntory Beverage & Food (TSE:2587) hit its ex-dividend date in the next three days. Typically, the ex-dividend date is one business day before the record date, which is the day the company determines which shareholders are eligible to receive the dividend. The ex-dividend date is important because it takes two full business days for the settlement process, so if you miss it, you won't be on the company's books on the record date. So, you can buy Suntory Beverage & Food shares before June 27th to receive the dividend the company will pay on September 6th.
The company's upcoming dividend will be ¥55.00 per share, following the distribution of ¥110 per share to shareholders over the last 12 months. Based on last year's dividend, this represents a historical yield of 1.9% on Suntory Beverage & Food's current share price of ¥5,677.00. Dividends are an important source of income for many shareholders, but the health of a business is crucial to maintaining a dividend. Therefore, we should always check whether dividend payments are sustainable and if the company is growing.
Check out our latest analysis for Suntory Beverage & Food International
Dividends are typically paid from a company's income, so if a company's dividend exceeds its profits, there is a higher risk that the dividend will be cut. That's why it's good to see that Suntory Beverage & Food International is paying out a modest 28% of its profits. However, cash flow is usually more important than profits for assessing dividend sustainability, so we should always check if a company generated enough cash to pay its dividend. Happily, the company paid out only 37% of its free cash flow in the past year.
It's positive to see that Suntory Beverage & Food'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.
Click here to see the company's dividend payout ratio, plus analyst estimates of its future dividends.
TSE:2587 June 23, 2024 Highest dividend ever
TSE:2587 June 23, 2024 Highest dividend ever Are profits and dividends increasing?
Stocks in companies that generate sustainable earnings growth often have the best dividend prospects, as they are more likely to raise dividends when earnings are rising. Investors love dividends, so if earnings fall and the dividend is cut, you can expect a heavy sell-off of the stock at the same time. It's reassuring, therefore, to see that Suntory Beverage & Food International's earnings per share have grown at 2.0% per year over the past five years. Earnings growth has been limited recently. But there are ways to grow dividends, and one of them is for a company to choose to pay out more of its earnings as dividends.
Another key way to gauge a company's dividend prospects is to look at the historical rate of dividend growth. Over the past 10 years, Suntory Beverage & Food has grown its dividend by an average of approximately 7.6% per year. It's encouraging to see the company raising its dividend amid growing profits, suggesting that the company at least has some interest in rewarding shareholders.
Conclusion
Is Suntory Beverage & Food an attractive dividend stock, or should you leave it on the shelf? Earnings per share have been growing modestly, and Suntory Beverage & Food is paying out less than half of its earnings and cash flow as dividends. This suggests the company is investing in growth, an attractive combination. Faster earnings growth is preferable, but the best dividend stocks over the long term usually combine strong earnings per share growth with low dividend payout ratios, and Suntory Beverage & Food falls somewhere in between. Suntory Beverage & Food looks solid overall in this analysis, and we would recommend considering investigating it further.
Have you ever wondered what the future holds for Suntory Beverage & Food? See what the 10 analysts we track are predicting with a visualization of the company's past and future expected earnings and cash flows.
If you're looking for stocks with high dividends, we recommend checking out our picks of the top dividend stocks.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
Valuation is complicated, but we can help make it simple.
Find out whether Suntory Beverage & Food International is potentially overvalued or undervalued by checking our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider trading, financial health and more.
View your free analysis
Have something to say about this article? If you have any questions about the content, please contact us directly or email us at editorial-team@simplywallst.com.
