Holiday Entertainment Co.,Ltd (TWSE:9943) Pays A NT$5.20 Dividend In Just Three Days

Holiday Entertainment Co.,Ltd (TWSE:9943) stock is about to trade ex-dividend in 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 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 Holiday EntertainmentLtd's shares before the 4th of July to receive the dividend, which will be paid on the 31st of July.

The company's next dividend payment will be NT$5.20 per share, and in the last 12 months, the company paid a total of NT$5.20 per share. Based on the last year's worth of payments, Holiday EntertainmentLtd has a trailing yield of 5.8% on the current stock price of NT$89.50. If you buy this business for its dividend, you should have an idea of whether Holiday EntertainmentLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Holiday EntertainmentLtd

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. Holiday EntertainmentLtd is paying out an acceptable 60% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Holiday EntertainmentLtd generated enough free cash flow to afford its dividend. It distributed 50% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Holiday EntertainmentLtd 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 Holiday EntertainmentLtd's earnings per share have been shrinking at 3.7% 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. Since the start of our data, 10 years ago, Holiday EntertainmentLtd has lifted its dividend by approximately 1.0% a year on average.

Final Takeaway

Has Holiday EntertainmentLtd got what it takes to maintain its dividend payments? 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. All things considered, we are not particularly enthused about Holiday EntertainmentLtd from a dividend perspective.

So if you want to do more digging on Holiday EntertainmentLtd, you'll find it worthwhile knowing the risks that this stock faces. We've identified 2 warning signs with Holiday EntertainmentLtd (at least 1 which is a bit unpleasant), and understanding these should be part of your investment process.

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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