Mandarin Oriental International Limited (SGX:M04) Stock Goes Ex-Dividend In Just Two Days

Mandarin Oriental International Limited (SGX:M04) stock is about to trade ex-dividend in two 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Mandarin Oriental International's shares before the 22nd of August in order to be eligible for the dividend, which will be paid on the 16th of October.

The company's next dividend payment will be US$0.015 per share, on the back of last year when the company paid a total of US$0.05 to shareholders. Based on the last year's worth of payments, Mandarin Oriental International has a trailing yield of 3.1% on the current stock price of US$1.60. If you buy this business for its dividend, you should have an idea of whether Mandarin Oriental International's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Mandarin Oriental International

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. Mandarin Oriental International reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Mandarin Oriental International reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mandarin Oriental International's dividend payments per share have declined at 3.3% per year on average over the past 10 years, which is uninspiring.

Remember, you can always get a snapshot of Mandarin Oriental International's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Is Mandarin Oriental International an attractive dividend stock, or better left on the shelf? It's hard to get used to Mandarin Oriental International paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. Bottom line: Mandarin Oriental International has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

With that being said, if you're still considering Mandarin Oriental International as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 1 warning sign for Mandarin Oriental International that you should be aware of before investing in their shares.

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.