Readers hoping to buy Japan Pulp and Paper Company Limited (TSE:8032) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company’s books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company’s books on the record date. This means that investors who purchase Japan Pulp and Paper’s shares on or after the 29th of September will not receive the dividend, which will be paid on the 2nd of December.
The company’s upcoming dividend is JP¥14.00 a share, following on from the last 12 months, when the company distributed a total of JP¥28.00 per share to shareholders. Calculating the last year’s worth of payments shows that Japan Pulp and Paper has a trailing yield of 3.8% on the current share price of JP¥732.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it’s growing.
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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Japan Pulp and Paper is paying out an acceptable 53% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 15% of its free cash flow in the last 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 Japan Pulp and Paper
Click here to see how much of its profit Japan Pulp and Paper paid out over the last 12 months.
TSE:8032 Historic Dividend September 24th 2025 Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it’s a relief to see Japan Pulp and Paper earnings per share are up 5.3% per annum over the last five years. Decent historical earnings per share growth suggests Japan Pulp and Paper has been effectively growing value for shareholders. However, it’s now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we’d take this as a tacit signal that the company’s growth prospects are slowing.
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, 10 years ago, Japan Pulp and Paper has lifted its dividend by approximately 11% a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Has Japan Pulp and Paper got what it takes to maintain its dividend payments? Earnings per share growth has been modest and Japan Pulp and Paper paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re not all that optimistic on its dividend prospects.
In light of that, while Japan Pulp and Paper has an appealing dividend, it’s worth knowing the risks involved with this stock. For example – Japan Pulp and Paper has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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