Smart-Core Holdings Limited (HKG:2166) Pays A HK$0.05 Dividend In Just Four Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Smart-Core Holdings Limited (HKG:2166) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Smart-Core Holdings investors that purchase the stock on or after the 3rd of June will not receive the dividend, which will be paid on the 28th of June.

The company's next dividend payment will be HK$0.05 per share. Last year, in total, the company distributed HK$0.05 to shareholders. Based on the last year's worth of payments, Smart-Core Holdings has a trailing yield of 3.8% on the current stock price of HK$1.32. If you buy this business for its dividend, you should have an idea of whether Smart-Core Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Smart-Core Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Smart-Core Holdings

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 Smart-Core Holdings's payout ratio is modest, at just 33% of profit. A useful secondary check can be to evaluate whether Smart-Core Holdings generated enough free cash flow to afford its dividend. The good news is it paid out just 7.9% of its free cash flow in the last year.

It's positive to see that Smart-Core 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 Smart-Core Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Smart-Core Holdings's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Smart-Core Holdings has delivered 3.2% dividend growth per year on average over the past seven years.

To Sum It Up

Has Smart-Core Holdings got what it takes to maintain its dividend payments? While it's not great to see that earnings per share are effectively flat over the seven-year period we checked, at least the payout ratios are low and conservative. To summarise, Smart-Core Holdings looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while Smart-Core Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 2 warning signs for Smart-Core Holdings that we recommend you consider before investing in the business.

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.