Be Sure To Check Out Complex Micro Interconnection Co.,Ltd. (TWSE:6835) Before It Goes Ex-Dividend

Readers hoping to buy Complex Micro Interconnection Co.,Ltd. (TWSE:6835) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Complex Micro InterconnectionLtd's shares before the 28th of March in order to receive the dividend, which the company will pay on the 21st of April.

The company's next dividend payment will be NT$2.00 per share. Last year, in total, the company distributed NT$2.00 to shareholders. Calculating the last year's worth of payments shows that Complex Micro InterconnectionLtd has a trailing yield of 3.9% on the current share price of NT$50.70. 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! As a result, readers should always check whether Complex Micro InterconnectionLtd has been able to grow its dividends, or if the dividend might be cut.

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. That's why it's good to see Complex Micro InterconnectionLtd paying out a modest 49% of its earnings. 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 39% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Complex Micro InterconnectionLtd'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.

View our latest analysis for Complex Micro InterconnectionLtd

Click here to see how much of its profit Complex Micro InterconnectionLtd 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 Complex Micro InterconnectionLtd, with earnings per share up 7.5% on average over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Complex Micro InterconnectionLtd also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Complex Micro InterconnectionLtd's dividend payments are broadly unchanged compared to where they were three years ago.

Final Takeaway

Should investors buy Complex Micro InterconnectionLtd for the upcoming dividend? Earnings per share have been growing moderately, and Complex Micro InterconnectionLtd is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Complex Micro InterconnectionLtd is halfway there. Complex Micro InterconnectionLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Want to learn more about Complex Micro InterconnectionLtd's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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.