Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see China Taiping Insurance Holdings Company Limited (HKG:966) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Meaning, you will need to purchase China Taiping Insurance Holdings' shares before the 10th of July to receive the dividend, which will be paid on the 23rd of July.
The company's next dividend payment will be HK$0.30 per share, on the back of last year when the company paid a total of HK$0.30 to shareholders. Based on the last year's worth of payments, China Taiping Insurance Holdings stock has a trailing yield of around 3.6% on the current share price of HK$8.35. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for China Taiping Insurance Holdings
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. China Taiping Insurance Holdings paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
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?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that China Taiping Insurance Holdings's earnings are down 4.1% a year over the past five years.
China Taiping Insurance Holdings 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. It's hard to grow dividends per share when a company keeps creating new shares.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. China Taiping Insurance Holdings has delivered an average of 17% per year annual increase in its dividend, based on the past seven years of dividend payments.
To Sum It Up
From a dividend perspective, should investors buy or avoid China Taiping Insurance Holdings? China Taiping Insurance Holdings's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
With that being said, if dividends aren't your biggest concern with China Taiping Insurance Holdings, you should know about the other risks facing this business. In terms of investment risks, we've identified 1 warning sign with China Taiping Insurance Holdings and understanding them should be part of your investment process.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com