Readers hoping to buy HK Electric Investments and HK Electric Investments Limited (HKG:2638) 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase HK Electric Investments and HK Electric Investments' shares on or after the 9th of April will not receive the dividend, which will be paid on the 23rd of April.
The company's upcoming dividend is HK$0.1609 a share, following on from the last 12 months, when the company distributed a total of HK$0.32 per share to shareholders. Calculating the last year's worth of payments shows that HK Electric Investments and HK Electric Investments has a trailing yield of 5.9% on the current share price of HK$5.45. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Last year, HK Electric Investments and HK Electric Investments paid out 91% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.
View our latest analysis for HK Electric Investments and HK Electric Investments
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at HK Electric Investments and HK Electric Investments, with earnings per share up 6.0% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the HK Electric Investments and HK Electric Investments dividends are largely the same as they were 10 years ago.
To Sum It Up
Has HK Electric Investments and HK Electric Investments got what it takes to maintain its dividend payments? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 91% of last year's earnings. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
So if you're still interested in HK Electric Investments and HK Electric Investments despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For instance, we've identified 2 warning signs for HK Electric Investments and HK Electric Investments (1 is concerning) you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.