Read This Before Considering Sunjuice Holdings Co., Limited (TWSE:1256) For Its Upcoming NT$6.60 Dividend

It looks like Sunjuice Holdings Co., Limited (TWSE:1256) is about to go ex-dividend in the next four 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. Accordingly, Sunjuice Holdings investors that purchase the stock on or after the 17th of July will not receive the dividend, which will be paid on the 16th of August.

The company's next dividend payment will be NT$6.60 per share. Last year, in total, the company distributed NT$6.60 to shareholders. Last year's total dividend payments show that Sunjuice Holdings has a trailing yield of 3.4% on the current share price of NT$194.50. If you buy this business for its dividend, you should have an idea of whether Sunjuice Holdings's dividend is reliable and sustainable. So we need to investigate whether Sunjuice Holdings can afford its dividend, and if the dividend could grow.

View our latest analysis for Sunjuice Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Sunjuice Holdings paid out more than half (53%) 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. Thankfully its dividend payments took up just 33% of the free cash flow it generated, which is a comfortable payout ratio.

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 Sunjuice Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. 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 Sunjuice Holdings's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Sunjuice Holdings has increased its dividend at approximately 8.4% a year on average.

The Bottom Line

Is Sunjuice Holdings an attractive dividend stock, or better left on the shelf? The payout ratios appear reasonably conservative, which implies the dividend may be somewhat sustainable. Still, with earnings basically flat, Sunjuice Holdings doesn't stand out from a dividend perspective. In summary, it's hard to get excited about Sunjuice Holdings from a dividend perspective.

If you want to look further into Sunjuice Holdings, it's worth knowing the risks this business faces. For instance, we've identified 2 warning signs for Sunjuice Holdings (1 makes us a bit uncomfortable) you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com