Be Sure To Check Out ASMedia Technology Inc. (TWSE:5269) Before It Goes Ex-Dividend

ASMedia Technology Inc. (TWSE:5269) stock is about to trade ex-dividend in 3 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 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 ASMedia Technology's shares before the 1st of August to receive the dividend, which will be paid on the 21st of August.

The company's upcoming dividend is NT$18.580614 a share, following on from the last 12 months, when the company distributed a total of NT$20.00 per share to shareholders. Based on the last year's worth of payments, ASMedia Technology has a trailing yield of 1.2% on the current stock price of NT$1615.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for ASMedia Technology

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. ASMedia Technology paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 42% 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see ASMedia Technology's earnings per share have risen 18% per annum over the last five years. ASMedia Technology is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ASMedia Technology has delivered 33% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has ASMedia Technology got what it takes to maintain its dividend payments? ASMedia Technology's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. There's a lot to like about ASMedia Technology, and we would prioritise taking a closer look at it.

While it's tempting to invest in ASMedia Technology for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for ASMedia Technology you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.

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