Yahoo Finance Is It Smart To Buy Ever Glory United Holdings Limited (Catalist:ZKX) Before It Goes Ex-Dividend?
Ever Glory United Holdings Limited (Catalist:ZKX) is about to trade ex-dividend in the next three 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Ever Glory United Holdings' shares before the 13th of June to receive the dividend, which will be paid on the 2nd of July.
The company's upcoming dividend is S$0.01 a share, following on from the last 12 months, when the company distributed a total of S$0.02 per share to shareholders. Calculating the last year's worth of payments shows that Ever Glory United Holdings has a trailing yield of 3.9% on the current share price of S$0.51. If you buy this business for its dividend, you should have an idea of whether Ever Glory United Holdings's dividend is reliable and sustainable. So we need to investigate whether Ever Glory United Holdings can afford its dividend, and if the dividend could grow.
See our latest analysis for Ever Glory United Holdings
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Ever Glory United Holdings paid out 57% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 22% of its free cash flow in the last year.
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 how much of its profit Ever Glory United Holdings 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For that reason, it's encouraging to see Ever Glory United Holdings's earnings over the past year have risen 25%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Ever Glory United Holdings could have strong prospects for future increases to the dividend.
We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.
Unfortunately Ever Glory United Holdings has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Is Ever Glory United Holdings worth buying for its dividend? Ever Glory United Holdings'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. Overall we think this is an attractive combination and worthy of further research.
While it's tempting to invest in Ever Glory United Holdings for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 3 warning signs for Ever Glory United Holdings 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.
