We Wouldn't Be Too Quick To Buy Tian An China Investments Company Limited (HKG:28) Before It Goes Ex-Dividend

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 Tian An China Investments Company Limited (HKG:28) is about to go ex-dividend in just 2 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Tian An China Investments' shares before the 3rd of April in order to be eligible for the dividend, which will be paid on the 25th of April.

The company's upcoming dividend is HK$0.10 a share, following on from the last 12 months, when the company distributed a total of HK$0.10 per share to shareholders. Looking at the last 12 months of distributions, Tian An China Investments has a trailing yield of approximately 2.3% on its current stock price of HK$4.34. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Tian An China Investments can afford its dividend, and if the dividend could grow.

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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. Tian An China Investments's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

See our latest analysis for Tian An China Investments

Click here to see how much of its profit Tian An China Investments 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. Tian An China Investments 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tian An China Investments has delivered an average of 4.4% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Get our latest analysis on Tian An China Investments's balance sheet health here.

The Bottom Line

Has Tian An China Investments got what it takes to maintain its dividend payments? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that in mind though, if the poor dividend characteristics of Tian An China Investments don't faze you, it's worth being mindful of the risks involved with this business. For example - Tian An China Investments has 1 warning sign we think 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.

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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.