It Might Not Be A Great Idea To Buy Innolux Corporation (TWSE:3481) For Its Next Dividend

Innolux Corporation (TWSE:3481) stock is about to trade ex-dividend in 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. 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. Thus, you can purchase Innolux's shares before the 15th of August in order to receive the dividend, which the company will pay on the 30th of August.

The company's next dividend payment will be NT$1.20 per share. Last year, in total, the company distributed NT$1.20 to shareholders. Calculating the last year's worth of payments shows that Innolux has a trailing yield of 8.3% on the current share price of NT$14.40. If you buy this business for its dividend, you should have an idea of whether Innolux's dividend is reliable and sustainable. So we need to investigate whether Innolux can afford its dividend, and if the dividend could grow.

See our latest analysis for Innolux

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Innolux paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Innolux reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Innolux has delivered an average of 21% per year annual increase in its dividend, based on the past 10 years of dividend payments.

We update our analysis on Innolux every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

From a dividend perspective, should investors buy or avoid Innolux? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that being said, if you're still considering Innolux as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 2 warning signs for Innolux (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the 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.