Dividend Investors: Don't Be Too Quick To Buy Sun Hung Kai & Co. Limited (HKG:86) For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sun Hung Kai & Co. Limited (HKG:86) is about to trade ex-dividend in the next three 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. Accordingly, Sun Hung Kai investors that purchase the stock on or after the 31st of August will not receive the dividend, which will be paid on the 15th of September.

The company's next dividend payment will be HK$0.12 per share, on the back of last year when the company paid a total of HK$0.26 to shareholders. Last year's total dividend payments show that Sun Hung Kai has a trailing yield of 9.2% on the current share price of HK$2.83. 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 Sun Hung Kai can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Sun Hung Kai

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Sun Hung Kai reported a loss last year, so it's not great to see that it has continued paying a dividend.

Click here to see how much of its profit Sun Hung Kai paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Sun Hung Kai reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sun Hung Kai has delivered an average of 2.7% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Remember, you can always get a snapshot of Sun Hung Kai's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

Is Sun Hung Kai an attractive dividend stock, or better left on the shelf? It's hard to get past the idea of Sun Hung Kai paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. Sun Hung Kai doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that being said, if you're still considering Sun Hung Kai as an investment, you'll find it beneficial to know what risks this stock is facing. Case in point: We've spotted 1 warning sign for Sun Hung Kai you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.