Bora Pharmaceuticals Co., LTD. (TWSE:6472) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Bora Pharmaceuticals Co., LTD. (TWSE:6472) stock is about to trade ex-dividend in 4 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. Meaning, you will need to purchase Bora Pharmaceuticals' shares before the 12th of August to receive the dividend, which will be paid on the 30th of August.

The company's upcoming dividend is NT$12.00 a share, following on from the last 12 months, when the company distributed a total of NT$12.00 per share to shareholders. Last year's total dividend payments show that Bora Pharmaceuticals has a trailing yield of 1.5% on the current share price of NT$780.00. If you buy this business for its dividend, you should have an idea of whether Bora Pharmaceuticals's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Bora Pharmaceuticals

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. Fortunately Bora Pharmaceuticals's payout ratio is modest, at just 45% of profit. A useful secondary check can be to evaluate whether Bora Pharmaceuticals generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 27% 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Bora Pharmaceuticals has grown its earnings rapidly, up 38% a year for the past five years. Bora Pharmaceuticals is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, nine years ago, Bora Pharmaceuticals has lifted its dividend by approximately 62% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is Bora Pharmaceuticals an attractive dividend stock, or better left on the shelf? Bora Pharmaceuticals has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past nine years, but the conservative payout ratio makes the current dividend look sustainable. Bora Pharmaceuticals looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Bora Pharmaceuticals is facing. Our analysis shows 1 warning sign for Bora Pharmaceuticals and you should be aware of this before buying any shares.

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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