Interested In Wharf Real Estate Investment's (HKG:1997) Upcoming HK$0.66 Dividend? You Have Four Days Left

Explore Wharf Real Estate Investment's Fair Values from the Community and select yours

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Wharf Real Estate Investment Company Limited (HKG:1997) is about to go ex-dividend in just four days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least 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, Wharf Real Estate Investment investors that purchase the stock on or after the 26th of August will not receive the dividend, which will be paid on the 11th of September.

The company's next dividend payment will be HK$0.66 per share, and in the last 12 months, the company paid a total of HK$1.24 per share. Looking at the last 12 months of distributions, Wharf Real Estate Investment has a trailing yield of approximately 5.3% on its current stock price of HK$23.58. 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 check whether the dividend payments are covered, and if earnings are growing.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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. Wharf Real Estate Investment reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.

Check out our latest analysis for Wharf Real Estate Investment

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Wharf Real Estate Investment was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past seven years, Wharf Real Estate Investment has increased its dividend at approximately 3.9% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Wharf Real Estate Investment is keeping back more of its profits to grow the business.

Remember, you can always get a snapshot of Wharf Real Estate Investment's financial health, by checking our visualisation of its financial health, here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Wharf Real Estate Investment? It's hard to get used to Wharf Real Estate Investment paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Wharf Real Estate Investment's dividend merits.

So if you want to do more digging on Wharf Real Estate Investment, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for Wharf Real Estate Investment you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.