Hong Kong Technology Venture Company Limited (HKG:1137) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Hong Kong Technology Venture Company Limited (HKG:1137) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is one business day 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 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, Hong Kong Technology Venture investors that purchase the stock on or after the 13th of September will not receive the dividend, which will be paid on the 6th of October.

The company's next dividend payment will be HK$0.08 per share, on the back of last year when the company paid a total of HK$0.16 to shareholders. Based on the last year's worth of payments, Hong Kong Technology Venture has a trailing yield of 1.4% on the current stock price of HK$11.1. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Hong Kong Technology Venture has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Hong Kong Technology Venture

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. Fortunately Hong Kong Technology Venture's payout ratio is modest, at just 43% of profit.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Hong Kong Technology Venture's earnings have been skyrocketing, up 50% per annum for the past five years. Hong Kong Technology Venture is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Hong Kong Technology Venture has seen its dividend decline 2.2% per annum on average over the past 10 years, which is not great to see. Hong Kong Technology Venture is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Is Hong Kong Technology Venture an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Hong Kong Technology Venture looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Hong Kong Technology Venture for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Hong Kong Technology Venture you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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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.
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