Suzhou K-Hiragawa Electronic Technology Co., Ltd. (SHSE:603052) Pays A CN¥0.50 Dividend In Just Two Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Suzhou K-Hiragawa Electronic Technology Co., Ltd. (SHSE:603052) is about to trade ex-dividend in the next 2 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Suzhou K-Hiragawa Electronic Technology's shares before the 3rd of June to receive the dividend, which will be paid on the 3rd of June.

The company's next dividend payment will be CN¥0.50 per share, on the back of last year when the company paid a total of CN¥0.50 to shareholders. Based on the last year's worth of payments, Suzhou K-Hiragawa Electronic Technology has a trailing yield of 1.2% on the current stock price of CN¥41.05. If you buy this business for its dividend, you should have an idea of whether Suzhou K-Hiragawa Electronic Technology's dividend is reliable and sustainable. As a result, readers should always check whether Suzhou K-Hiragawa Electronic Technology has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Suzhou K-Hiragawa Electronic Technology

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Suzhou K-Hiragawa Electronic Technology's payout ratio is modest, at just 49% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 53% of its free cash flow as dividends, within the usual 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 Suzhou K-Hiragawa Electronic Technology paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Suzhou K-Hiragawa Electronic Technology's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Given that Suzhou K-Hiragawa Electronic Technology has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Is Suzhou K-Hiragawa Electronic Technology worth buying for its dividend? Earnings per share have been flat over the one-year timeframe we consider, and Suzhou K-Hiragawa Electronic Technology paid out less than half its earnings and more than half its free cashflow over the last year. Overall, it's hard to get excited about Suzhou K-Hiragawa Electronic Technology from a dividend perspective.

So while Suzhou K-Hiragawa Electronic Technology looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for Suzhou K-Hiragawa Electronic Technology you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.