AmTRAN Technology Co.,Ltd (TWSE:2489) Looks Interesting, And It's About To Pay A Dividend

It looks like AmTRAN Technology Co.,Ltd (TWSE:2489) is about to go ex-dividend in the next three 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, AmTRAN TechnologyLtd investors that purchase the stock on or after the 18th of October will not receive the dividend, which will be paid on the 14th of November.

The company's upcoming dividend is NT$0.59 a share, following on from the last 12 months, when the company distributed a total of NT$0.59 per share to shareholders. Looking at the last 12 months of distributions, AmTRAN TechnologyLtd has a trailing yield of approximately 2.7% on its current stock price of NT$21.60. 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 investigate whether AmTRAN TechnologyLtd can afford its dividend, and if the dividend could grow.

View our latest analysis for AmTRAN TechnologyLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. AmTRAN TechnologyLtd paid out a comfortable 42% of its profit last year.

Click here to see how much of its profit AmTRAN TechnologyLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see AmTRAN TechnologyLtd has grown its earnings rapidly, up 46% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AmTRAN TechnologyLtd has seen its dividend decline 13% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is AmTRAN TechnologyLtd worth buying for its dividend? Companies like AmTRAN TechnologyLtd that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, AmTRAN TechnologyLtd looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while AmTRAN TechnologyLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For instance, we've identified 4 warning signs for AmTRAN TechnologyLtd (1 shouldn't be ignored) you should be aware of.

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.