Read This Before Considering Siglent Technologies CO.,Ltd. (SHSE:688112) For Its Upcoming CN¥0.88 Dividend

Siglent Technologies CO.,Ltd. (SHSE:688112) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day 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 two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Siglent TechnologiesLtd's shares before the 4th of June in order to receive the dividend, which the company will pay on the 4th of June.

The company's next dividend payment will be CN¥0.88 per share, on the back of last year when the company paid a total of CN¥0.88 to shareholders. Based on the last year's worth of payments, Siglent TechnologiesLtd stock has a trailing yield of around 2.7% on the current share price of CN¥32.10. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Siglent TechnologiesLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Siglent TechnologiesLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Siglent TechnologiesLtd paid out 94% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. 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. It paid out 77% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's good to see that while Siglent TechnologiesLtd's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. That's why it's comforting to see Siglent TechnologiesLtd's earnings have been skyrocketing, up 28% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Siglent TechnologiesLtd has delivered an average of 67% per year annual increase in its dividend, based on the past two years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Should investors buy Siglent TechnologiesLtd for the upcoming dividend? Siglent TechnologiesLtd has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. In summary, while it has some positive characteristics, we're not inclined to race out and buy Siglent TechnologiesLtd today.

If you want to look further into Siglent TechnologiesLtd, it's worth knowing the risks this business faces. For example, we've found 1 warning sign for Siglent TechnologiesLtd that we recommend you consider before investing in the business.

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.