Two Days Left To Buy GLOBAL TEK FABRICATION CO., Ltd. (TWSE:4566) Before The Ex-Dividend Date

GLOBAL TEK FABRICATION CO., Ltd. (TWSE:4566) stock is about to trade ex-dividend in 2 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, GLOBAL TEK FABRICATION investors that purchase the stock on or after the 25th of April will not receive the dividend, which will be paid on the 17th of May.

The company's next dividend payment will be NT$1.434713 per share, on the back of last year when the company paid a total of NT$1.44 to shareholders. Last year's total dividend payments show that GLOBAL TEK FABRICATION has a trailing yield of 2.8% on the current share price of NT$50.80. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for GLOBAL TEK FABRICATION

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. That's why it's good to see GLOBAL TEK FABRICATION paying out a modest 47% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 49% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that GLOBAL TEK FABRICATION'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 GLOBAL TEK FABRICATION paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that GLOBAL TEK FABRICATION's earnings are down 2.9% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. GLOBAL TEK FABRICATION has delivered an average of 5.3% per year annual increase in its dividend, based on the past seven years of dividend payments.

Final Takeaway

Is GLOBAL TEK FABRICATION worth buying for its dividend? GLOBAL TEK FABRICATION has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

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

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.