Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that BOC Hong Kong (Holdings) Limited (HKG:2388) is about to go ex-dividend in just four days. The ex-dividend date is one business day 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 takes at least two business day to settle. Therefore, if you purchase BOC Hong Kong (Holdings)'s shares on or after the 2nd of July, you won't be eligible to receive the dividend, when it is paid on the 15th of July.
The company's next dividend payment will be HK$1.145 per share. Last year, in total, the company distributed HK$1.67 to shareholders. Based on the last year's worth of payments, BOC Hong Kong (Holdings) stock has a trailing yield of around 7.0% on the current share price of HK$23.95. 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 BOC Hong Kong (Holdings) has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for BOC Hong Kong (Holdings)
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. BOC Hong Kong (Holdings) is paying out an acceptable 54% of its profit, a common payout level among most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about BOC Hong Kong (Holdings)'s flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, BOC Hong Kong (Holdings) has lifted its dividend by approximately 5.2% a year on average.
Final Takeaway
Is BOC Hong Kong (Holdings) an attractive dividend stock, or better left on the shelf? BOC Hong Kong (Holdings) has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
If you're not too concerned about BOC Hong Kong (Holdings)'s ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Our analysis shows 1 warning sign for BOC Hong Kong (Holdings) and you should be aware of this before buying any shares.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com