Be Sure To Check Out International Housewares Retail Company Limited (HKG:1373) Before It Goes Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see International Housewares Retail Company Limited (HKG:1373) is about to trade ex-dividend in the next three days. This means that investors who purchase shares on or after the 8th of January will not receive the dividend, which will be paid on the 25th of January.

International Housewares Retail's next dividend payment will be HK$0.09 per share. Last year, in total, the company distributed HK$0.17 to shareholders. Looking at the last 12 months of distributions, International Housewares Retail has a trailing yield of approximately 6.3% on its current stock price of HK$2.63. If you buy this business for its dividend, you should have an idea of whether International Housewares Retail's dividend is reliable and sustainable. So we need to investigate whether International Housewares Retail can afford its dividend, and if the dividend could grow.

Check out our latest analysis for International Housewares Retail

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. International Housewares Retail paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether International Housewares Retail generated enough free cash flow to afford its dividend. Luckily it paid out just 21% of its free cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit International Housewares Retail paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see International Housewares Retail's earnings have been skyrocketing, up 26% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, International Housewares Retail could have strong prospects for future increases to the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past seven years, International Housewares Retail has increased its dividend at approximately 22% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is International Housewares Retail worth buying for its dividend? International Housewares Retail's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks International Housewares Retail is facing. To help with this, we've discovered 1 warning sign for International Housewares Retail that you should be aware of before investing in their shares.

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. 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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