Kina Securities Limited (ASX:KSL) stock is about to trade ex-dividend in 2 days time. If you purchase the stock on or after the 28th of August, you won’t be eligible to receive this dividend, when it is paid on the 26th of September.
Kina Securities’s upcoming dividend is K0.04 a share, following on from the last 12 months, when the company distributed a total of K0.22 per share to shareholders. Looking at the last 12 months of distributions, Kina Securities has a trailing yield of approximately 7.0% on its current stock price of A$1.38. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Kina Securities can afford its dividend, and if the dividend could grow.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Kina Securities paid out 71% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
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. It’s encouraging to see Kina Securities has grown its earnings rapidly, up 96% a year for the past five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Kina Securities has delivered 32% dividend growth per year on average over the past 4 years. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
From a dividend perspective, should investors buy or avoid Kina Securities? Earnings per share are growing nicely, and Kina Securities is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Kina Securities looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Curious about whether Kina Securities has been able to consistently generate growth? Here’s a chart of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.