It looks like Wharf Real Estate Investment Company Limited (HKG:1997) is about to go ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 24th of March will not receive this dividend, which will be paid on the 22nd of April.
Wharf Real Estate Investment's upcoming dividend is HK$0.69 a share, following on from the last 12 months, when the company distributed a total of HK$1.47 per share to shareholders. Looking at the last 12 months of distributions, Wharf Real Estate Investment has a trailing yield of approximately 3.3% on its current stock price of HK$44.05. If you buy this business for its dividend, you should have an idea of whether Wharf Real Estate Investment's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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.
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. Wharf Real Estate Investment 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. Since the start of our data, three years ago, Wharf Real Estate Investment has lifted its dividend by approximately 16% a year on average.
Remember, you can always get a snapshot of Wharf Real Estate Investment's financial health, by checking our visualisation of its financial health, here.
The Bottom Line
Should investors buy Wharf Real Estate Investment for the upcoming dividend? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
With that in mind though, if the poor dividend characteristics of Wharf Real Estate Investment don't faze you, it's worth being mindful of the risks involved with this business. Case in point: We've spotted 1 warning sign for Wharf Real Estate Investment you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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