Here's What We Like About Evertop Wire Cable's (TWSE:1616) Upcoming Dividend

Evertop Wire Cable Corporation (TWSE:1616) stock is about to trade ex-dividend in four 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. 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, Evertop Wire Cable investors that purchase the stock on or after the 28th of August will not receive the dividend, which will be paid on the 20th of September.

The company's next dividend payment will be NT$0.37 per share. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Evertop Wire Cable

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. Evertop Wire Cable paid out a comfortable 44% of its profit last year.

Click here to see how much of its profit Evertop Wire Cable paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Evertop Wire Cable's earnings have been skyrocketing, up 73% per annum for the past five years. Evertop Wire Cable is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

This is Evertop Wire Cable's first year of paying a regular dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.

The Bottom Line

Is Evertop Wire Cable an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Evertop Wire Cable more closely.

While it's tempting to invest in Evertop Wire Cable for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Evertop Wire Cable that we recommend you consider before investing in the business.

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

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

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.