Read This Before Considering SuperAlloy Industrial Co., Ltd. (TWSE:1563) For Its Upcoming NT$1.802098 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see SuperAlloy Industrial Co., Ltd. (TWSE:1563) is about to trade ex-dividend in the next 3 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. 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. In other words, investors can purchase SuperAlloy Industrial's shares before the 18th of July in order to be eligible for the dividend, which will be paid on the 9th of August.

The company's next dividend payment will be NT$1.802098 per share, and in the last 12 months, the company paid a total of NT$2.01 per share. Based on the last year's worth of payments, SuperAlloy Industrial has a trailing yield of 2.5% on the current stock price of NT$71.50. If you buy this business for its dividend, you should have an idea of whether SuperAlloy Industrial's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for SuperAlloy Industrial

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. SuperAlloy Industrial paid out more than half (59%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 22% of its free cash flow last year.

It's positive to see that SuperAlloy Industrial'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 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. SuperAlloy Industrial's earnings per share have fallen at approximately 9.4% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. SuperAlloy Industrial has delivered an average of 2.8% per year annual increase in its dividend, based on the past 10 years of dividend payments. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

Final Takeaway

Is SuperAlloy Industrial worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. Overall, it's hard to get excited about SuperAlloy Industrial from a dividend perspective.

So if you want to do more digging on SuperAlloy Industrial, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 3 warning signs for SuperAlloy Industrial you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com