Be Sure To Check Out Yan Tat Group Holdings Limited (HKG:1480) Before It Goes Ex-Dividend

Yan Tat Group Holdings Limited (HKG:1480) 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Yan Tat Group Holdings investors that purchase the stock on or after the 5th of June will not receive the dividend, which will be paid on the 4th of July.

The company's next dividend payment will be HK$0.10 per share, and in the last 12 months, the company paid a total of HK$0.10 per share. Based on the last year's worth of payments, Yan Tat Group Holdings has a trailing yield of 7.8% on the current stock price of HK$1.28. If you buy this business for its dividend, you should have an idea of whether Yan Tat Group Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Yan Tat Group Holdings has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Yan Tat Group Holdings

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. That's why it's good to see Yan Tat Group Holdings paying out a modest 32% of its earnings. A useful secondary check can be to evaluate whether Yan Tat Group Holdings generated enough free cash flow to afford its dividend. Luckily it paid out just 24% of its free cash flow last year.

It's positive to see that Yan Tat Group Holdings's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Yan Tat Group Holdings paid out over the last 12 months.

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Yan Tat Group Holdings earnings per share are up 5.2% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past nine years, Yan Tat Group Holdings has increased its dividend at approximately 8.0% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Yan Tat Group Holdings got what it takes to maintain its dividend payments? Earnings per share growth has been growing somewhat, and Yan Tat Group Holdings is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Yan Tat Group Holdings is being conservative with its dividend payouts and could still perform reasonably over the long run. Overall we think this is an attractive combination and worthy of further research.

So while Yan Tat Group Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for Yan Tat Group Holdings you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.