Yi Shin Textile Industrial Co., Ltd. (TWSE:4440) Stock Goes Ex-Dividend In Just Four Days

Yi Shin Textile Industrial Co., Ltd. (TWSE:4440) stock is about to trade ex-dividend in 4 days. The ex-dividend date is two business days before a company's record date in most cases, 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. Thus, you can purchase Yi Shin Textile Industrial's shares before the 1st of April in order to receive the dividend, which the company will pay on the 29th of April.

The company's next dividend payment will be NT$1.60 per share. Last year, in total, the company distributed NT$1.60 to shareholders. Based on the last year's worth of payments, Yi Shin Textile Industrial stock has a trailing yield of around 6.2% on the current share price of NT$25.85. If you buy this business for its dividend, you should have an idea of whether Yi Shin Textile Industrial's dividend is reliable and sustainable. So we need to investigate whether Yi Shin Textile Industrial can afford its dividend, and if the dividend could grow.

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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. Yi Shin Textile Industrial paid out more than half (59%) of its earnings last year, which is a regular payout ratio for most companies. 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. It distributed 48% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Yi Shin Textile Industrial'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.

Check out our latest analysis for Yi Shin Textile Industrial

Click here to see how much of its profit Yi Shin Textile Industrial paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. 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 not ideal to see Yi Shin Textile Industrial's earnings per share have been shrinking at 4.0% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last five years, Yi Shin Textile Industrial has lifted its dividend by approximately 5.9% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

Final Takeaway

Is Yi Shin Textile Industrial an attractive dividend stock, or better left on the shelf? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Yi Shin Textile Industrial's dividend merits.

If you want to look further into Yi Shin Textile Industrial, it's worth knowing the risks this business faces. We've identified 3 warning signs with Yi Shin Textile Industrial (at least 1 which is a bit unpleasant), and understanding them should be part of your investment process.

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.