International Housewares Retail Company Limited (HKG: 1373) the stock is about to trade excluding dividend in 3 days. The ex-dividend date occurs one day before the record date, which is the day on which shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. Thus, you can buy shares of International Housewares Retail before January 7 in order to receive the dividend that the company will pay on February 8.
The company’s next dividend is HK $ 0.15 per share, following the last 12 months when the company has distributed a total of HK $ 0.20 per share to shareholders. Based on the value of last year’s payouts, the International Housewares Retail share has a yield of approximately 7.1% on the current share price of HK $ 2.81. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining these dividends. So we need to determine whether International Housewares Retail can afford its dividend and whether the dividend could increase.
Check out our latest analysis for International Housewares Retail
Dividends are usually paid out of business income, so if a business pays more than it earned, its dividend is usually at risk of being reduced. Its dividend payout ratio is 85% of profits, which means the company pays out the majority of its profits. The relatively limited reinvestment of earnings could slow the rate of future earnings growth. We would be concerned about the risk of falling earnings. Yet cash flow is usually more important than earnings in assessing dividend sustainability, so we always need to check whether the company has generated enough cash to pay its dividend. Fortunately, he has only paid out 27% of his free cash flow in the past year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to see how much of its profits International Housewares Retail has paid in the past 12 months.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. Investors love dividends, so if profits go down and the dividend is reduced, expect a stock to be sold massively at the same time. That’s why it’s heartwarming to see International Housewares Retail’s profits soar, rising 22% annually over the past five years. Earnings per share are growing at a rapid rate, but the company is paying more than three-quarters of its profits.
Many investors will assess a company’s dividend performance by evaluating how much dividend payments have changed over time. Since our data began eight years ago, International Housewares Retail has increased its dividend by around 22% per year on average. Both earnings per share and dividends have been rising rapidly lately, which is great to see.
The bottom line
Should investors buy International Housewares Retail for the next dividend? International Housewares Retail’s growing earnings per share and conservative payout ratios are a decent combination. We also like the fact that it pays a lower percentage of its cash flow. There is a lot to love about International Housewares Retail, and we would prioritize taking a closer look.
With that in mind, an essential part of in-depth stock research is being aware of the risks stocks currently face. Every business has risks, and we have spotted 3 warning signs for International Housewares Retail you should know.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.