Interested In Fulin Plastic Industry (Cayman) Holding's (TWSE:1341) Upcoming NT$4.40023116 Dividend? You Have Three Days Left

Fulin Plastic Industry (Cayman) Holding Co., Ltd. (TWSE:1341) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Fulin Plastic Industry (Cayman) Holding's shares on or after the 28th of June will not receive the dividend, which will be paid on the 26th of July.

The company's next dividend payment will be NT$4.40023116 per share, on the back of last year when the company paid a total of NT$4.50 to shareholders. Calculating the last year's worth of payments shows that Fulin Plastic Industry (Cayman) Holding has a trailing yield of 6.4% on the current share price of NT$70.50. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Fulin Plastic Industry (Cayman) Holding has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Fulin Plastic Industry (Cayman) Holding

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Fulin Plastic Industry (Cayman) Holding paid out 98% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. A useful secondary check can be to evaluate whether Fulin Plastic Industry (Cayman) Holding generated enough free cash flow to afford its dividend. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

It's good to see that while Fulin Plastic Industry (Cayman) Holding's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Fulin Plastic Industry (Cayman) Holding 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. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Fulin Plastic Industry (Cayman) Holding earnings per share are up 4.3% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, five years ago, Fulin Plastic Industry (Cayman) Holding has lifted its dividend by approximately 8.4% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Should investors buy Fulin Plastic Industry (Cayman) Holding for the upcoming dividend? Earnings per share have grown modestly, and last year Fulin Plastic Industry (Cayman) Holding paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Fulin Plastic Industry (Cayman) Holding's dividend merits.

With that being said, if dividends aren't your biggest concern with Fulin Plastic Industry (Cayman) Holding, you should know about the other risks facing this business. For example - Fulin Plastic Industry (Cayman) Holding has 1 warning sign we think 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