Tsann Kuen Enterprise Co.,Ltd (TWSE:2430) Goes Ex-Dividend Soon

Tsann Kuen Enterprise Co.,Ltd (TWSE:2430) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Tsann Kuen EnterpriseLtd's shares before the 21st of March in order to receive the dividend, which the company will pay on the 24th of April.

The company's next dividend payment will be NT$2.20 per share, and in the last 12 months, the company paid a total of NT$2.20 per share. Calculating the last year's worth of payments shows that Tsann Kuen EnterpriseLtd has a trailing yield of 5.4% on the current share price of NT$40.55. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Tsann Kuen EnterpriseLtd

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Last year, Tsann Kuen EnterpriseLtd paid out 92% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business. 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 49% of the free cash flow it generated, which is a comfortable payout ratio.

It's good to see that while Tsann Kuen EnterpriseLtd's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

Click here to see how much of its profit Tsann Kuen EnterpriseLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Tsann Kuen EnterpriseLtd, with earnings per share up 4.5% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Tsann Kuen EnterpriseLtd's dividend payments per share have declined at 2.6% per year on average over the past 10 years, which is uninspiring. Tsann Kuen EnterpriseLtd is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Is Tsann Kuen EnterpriseLtd an attractive dividend stock, or better left on the shelf? Tsann Kuen EnterpriseLtd has been steadily growing its earnings per share, and it is paying out just 49% of its cash flow but an uncomfortably high 92% of its income. To summarise, Tsann Kuen EnterpriseLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

However if you're still interested in Tsann Kuen EnterpriseLtd as a potential investment, you should definitely consider some of the risks involved with Tsann Kuen EnterpriseLtd. Case in point: We've spotted 2 warning signs for Tsann Kuen EnterpriseLtd you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.