Four Days Left To Buy Miramar Hotel and Investment Company, Limited (HKG:71) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Miramar Hotel and Investment Company, Limited (HKG:71) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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 Miramar Hotel and Investment Company's shares before the 11th of June in order to receive the dividend, which the company will pay on the 11th of July.

The company's next dividend payment will be HK$0.30 per share, and in the last 12 months, the company paid a total of HK$0.53 per share. Based on the last year's worth of payments, Miramar Hotel and Investment Company has a trailing yield of 5.2% on the current stock price of HK$10.14. 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 Miramar Hotel and Investment Company can afford its dividend, and if the dividend could grow.

View our latest analysis for Miramar Hotel and Investment Company

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Miramar Hotel and Investment Company paid out a comfortable 37% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 36% of its free cash flow in the past year.

It's positive to see that Miramar Hotel and Investment Company's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Miramar Hotel and Investment Company paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. 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 Miramar Hotel and Investment Company's 9.7% 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. In the past 10 years, Miramar Hotel and Investment Company has increased its dividend at approximately 1.9% a year on average.

To Sum It Up

Should investors buy Miramar Hotel and Investment Company for the upcoming dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about Miramar Hotel and Investment Company from a dividend perspective.

In light of that, while Miramar Hotel and Investment Company has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Miramar Hotel and Investment Company and you should be aware of it before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.