Kerry Logistics Network Limited (HKG:636) Will Pay A HK$0.10 Dividend In Four Days

It looks like Kerry Logistics Network Limited (HKG:636) is about to go ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase Kerry Logistics Network's shares on or after the 9th of September, you won't be eligible to receive the dividend, when it is paid on the 23rd of September.

The company's next dividend payment will be HK$0.10 per share, on the back of last year when the company paid a total of HK$0.22 to shareholders. Based on the last year's worth of payments, Kerry Logistics Network stock has a trailing yield of around 3.3% on the current share price of HK$6.65. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Kerry Logistics Network

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kerry Logistics Network paid out a comfortable 25% of its profit last year. A useful secondary check can be to evaluate whether Kerry Logistics Network generated enough free cash flow to afford its dividend. Fortunately, it paid out only 40% of its free cash flow in the past 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Kerry Logistics Network's earnings per share have fallen at approximately 8.9% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Kerry Logistics Network also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Kerry Logistics Network has lifted its dividend by approximately 7.2% a year on average.

Final Takeaway

Is Kerry Logistics Network an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. All things considered, we are not particularly enthused about Kerry Logistics Network from a dividend perspective.

While it's tempting to invest in Kerry Logistics Network for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Kerry Logistics Network and you should be aware of it before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.