There's A Lot To Like About AmTRAN TechnologyLtd's (TWSE:2489) Upcoming NT$0.81205242 Dividend

AmTRAN Technology Co.,Ltd (TWSE:2489) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase AmTRAN TechnologyLtd's shares on or after the 19th of September will not receive the dividend, which will be paid on the 4th of October.

The company's next dividend payment will be NT$0.81205242 per share, and in the last 12 months, the company paid a total of NT$0.54 per share. Looking at the last 12 months of distributions, AmTRAN TechnologyLtd has a trailing yield of approximately 2.6% on its current stock price of NT$20.40. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether AmTRAN TechnologyLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for AmTRAN TechnologyLtd

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately AmTRAN TechnologyLtd's payout ratio is modest, at just 42% of profit.

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 fall far enough, the company could be forced to cut its dividend. 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. AmTRAN TechnologyLtd's dividend payments per share have declined at 13% per year on average over the past 10 years, which is uninspiring. AmTRAN TechnologyLtd is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Should investors buy AmTRAN TechnologyLtd for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, AmTRAN TechnologyLtd looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while AmTRAN TechnologyLtd has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 4 warning signs for AmTRAN TechnologyLtd (of which 1 is significant!) you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.