Star Comgistic Capital Co., Ltd. (TWSE:4930) Stock Goes Ex-Dividend In Just Four Days

Star Comgistic Capital Co., Ltd. (TWSE:4930) stock is about to trade ex-dividend in four 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Star Comgistic Capital's shares before the 1st of April to receive the dividend, which will be paid on the 30th 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. Calculating the last year's worth of payments shows that Star Comgistic Capital has a trailing yield of 5.2% on the current share price of NT$30.65. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Star Comgistic Capital has been able to grow its dividends, or if the dividend might be cut.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Star Comgistic Capital paid out 60% of its earnings to investors last year, a normal payout level for most businesses. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 7.9% of its cash flow last year.

It's positive to see that Star Comgistic Capital'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.

See our latest analysis for Star Comgistic Capital

Click here to see how much of its profit Star Comgistic Capital 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Star Comgistic Capital, with earnings per share up 5.2% on average over the last five years. Decent historical earnings per share growth suggests Star Comgistic Capital has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Star Comgistic Capital's dividend payments per share have declined at 13% per year on average over the past 10 years, which is uninspiring. Star Comgistic Capital 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.

The Bottom Line

Is Star Comgistic Capital worth buying for its dividend? While earnings per share growth has been modest, Star Comgistic Capital's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. In summary, it's hard to get excited about Star Comgistic Capital from a dividend perspective.

In light of that, while Star Comgistic Capital has an appealing dividend, it's worth knowing the risks involved with this stock. For example, Star Comgistic Capital has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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.