Ching Feng Home Fashions Co.,Ltd (TWSE:9935) Is About To Go Ex-Dividend, And It Pays A 1.8% Yield

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Ching Feng Home Fashions Co.,Ltd (TWSE:9935) is about to go ex-dividend in just three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. In other words, investors can purchase Ching Feng Home FashionsLtd's shares before the 18th of July in order to be eligible for the dividend, which will be paid on the 15th of August.

The company's next dividend payment will be NT$0.50 per share. Last year, in total, the company distributed NT$0.50 to shareholders. Based on the last year's worth of payments, Ching Feng Home FashionsLtd stock has a trailing yield of around 1.8% on the current share price of NT$27.45. 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! So we need to investigate whether Ching Feng Home FashionsLtd can afford its dividend, and if the dividend could grow.

See our latest analysis for Ching Feng Home FashionsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Ching Feng Home FashionsLtd's payout ratio is modest, at just 39% of profit. 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 37% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Ching Feng Home FashionsLtd'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.

Click here to see how much of its profit Ching Feng Home FashionsLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. 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 not encouraging to see that Ching Feng Home FashionsLtd's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past five years, Ching Feng Home FashionsLtd has increased its dividend at approximately 9.2% a year on average.

The Bottom Line

Is Ching Feng Home FashionsLtd an attractive dividend stock, or better left on the shelf? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy Ching Feng Home FashionsLtd today.

While it's tempting to invest in Ching Feng Home FashionsLtd for the dividends alone, you should always be mindful of the risks involved. Be aware that Ching Feng Home FashionsLtd is showing 3 warning signs in our investment analysis, and 2 of those can't be ignored...

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.

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