Four Days Left To Buy Trade-Van Information Services Co. (TWSE:6183) Before The Ex-Dividend Date

It looks like Trade-Van Information Services Co. (TWSE:6183) is about to go ex-dividend in the next four 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. 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. This means that investors who purchase Trade-Van Information Services' shares on or after the 27th of August will not receive the dividend, which will be paid on the 20th of September.

The company's next dividend payment will be NT$2.75 per share, and in the last 12 months, the company paid a total of NT$2.75 per share. Based on the last year's worth of payments, Trade-Van Information Services stock has a trailing yield of around 3.7% on the current share price of NT$75.00. If you buy this business for its dividend, you should have an idea of whether Trade-Van Information Services's dividend is reliable and sustainable. As a result, readers should always check whether Trade-Van Information Services has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Trade-Van Information Services

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. It paid out 88% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline. A useful secondary check can be to evaluate whether Trade-Van Information Services generated enough free cash flow to afford its dividend. Dividends consumed 73% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Trade-Van Information Services'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 Trade-Van Information Services 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. For this reason, we're glad to see Trade-Van Information Services's earnings per share have risen 11% per annum over the last five years. It paid out more than three-quarters of its earnings in the last year, even though earnings per share are growing rapidly. We're surprised that management has not elected to reinvest more in the business to accelerate growth further.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Trade-Van Information Services has delivered 9.9% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is Trade-Van Information Services worth buying for its dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Trade-Van Information Services's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 88% and 73% respectively. All things considered, we are not particularly enthused about Trade-Van Information Services from a dividend perspective.

Curious about whether Trade-Van Information Services has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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.