Iron Force Industrial Co., Ltd. (TWSE:2228) Goes Ex-Dividend Soon

It looks like Iron Force Industrial Co., Ltd. (TWSE:2228) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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, Iron Force Industrial investors that purchase the stock on or after the 17th of July will not receive the dividend, which will be paid on the 9th of August.

The company's next dividend payment will be NT$5.00 per share. Last year, in total, the company distributed NT$5.00 to shareholders. Calculating the last year's worth of payments shows that Iron Force Industrial has a trailing yield of 4.8% on the current share price of NT$105.00. 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 investigate whether Iron Force Industrial can afford its dividend, and if the dividend could grow.

See our latest analysis for Iron Force 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. Iron Force Industrial paid out 55% of its earnings to investors last year, a normal payout level for most businesses. 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. It paid out more than half (51%) of its free cash flow in the past year, which is within an average range for most companies.

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 how much of its profit Iron Force Industrial 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 earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Iron Force Industrial, with earnings per share up 6.4% on average over the last five years. Decent historical earnings per share growth suggests Iron Force Industrial has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Iron Force Industrial has delivered an average of 8.6% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Has Iron Force Industrial got what it takes to maintain its dividend payments? Earnings per share have been growing modestly and Iron Force Industrial paid out a bit over half of its earnings and free cash flow last year. In summary, it's hard to get excited about Iron Force Industrial from a dividend perspective.

So if you want to do more digging on Iron Force Industrial, you'll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for Iron Force Industrial and you should be aware of this before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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