Two Days Left Until Emperor Entertainment Hotel Limited (HKG:296) Trades Ex-Dividend

It looks like Emperor Entertainment Hotel Limited (HKG:296) is about to go 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Emperor Entertainment Hotel's shares on or after the 23rd of August, you won't be eligible to receive the dividend, when it is paid on the 19th of September.

The company's next dividend payment will be HK$0.015 per share. Last year, in total, the company distributed HK$0.015 to shareholders. Based on the last year's worth of payments, Emperor Entertainment Hotel stock has a trailing yield of around 4.6% on the current share price of HK$0.325. 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! So we need to investigate whether Emperor Entertainment Hotel can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Emperor Entertainment Hotel

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. Emperor Entertainment Hotel paid out a comfortable 29% of its profit last year.

Click here to see how much of its profit Emperor Entertainment Hotel paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Emperor Entertainment Hotel's 29% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Emperor Entertainment Hotel's dividend payments per share have declined at 20% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Is Emperor Entertainment Hotel worth buying for its dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. In summary, Emperor Entertainment Hotel appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Emperor Entertainment Hotel is facing. To help with this, we've discovered 4 warning signs for Emperor Entertainment Hotel (1 is potentially serious!) that you ought to be aware of before buying the shares.

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.