Hsing Ta Cement Co.,Ltd (TWSE:1109) Goes Ex-Dividend Soon

Hsing Ta Cement Co.,Ltd (TWSE:1109) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company's record date, 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. In other words, investors can purchase Hsing Ta CementLtd'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 upcoming dividend is NT$1.20 a share, following on from the last 12 months, when the company distributed a total of NT$1.20 per share to shareholders. Looking at the last 12 months of distributions, Hsing Ta CementLtd has a trailing yield of approximately 6.1% on its current stock price of NT$19.75. 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 Hsing Ta CementLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Hsing Ta CementLtd

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. Hsing Ta CementLtd paid out 62% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 40% of its free cash flow in the past year.

It's positive to see that Hsing Ta CementLtd'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 Hsing Ta CementLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Hsing Ta CementLtd's earnings per share have been shrinking at 3.9% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Hsing Ta CementLtd has increased its dividend at approximately 9.9% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

The Bottom Line

Should investors buy Hsing Ta CementLtd for the upcoming dividend? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. In summary, it's hard to get excited about Hsing Ta CementLtd from a dividend perspective.

So if you want to do more digging on Hsing Ta CementLtd, you'll find it worthwhile knowing the risks that this stock faces. Be aware that Hsing Ta CementLtd is showing 2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

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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