At Simply Wall St, we have a strong appreciation for dividends, making it exciting to note that Holy Stone Enterprise Co., Ltd. (TWSE:3026) is set to trade ex-dividend in the next 4 days. The ex-dividend date is crucial as it determines which shareholders are eligible to receive a dividend. Investors can purchase Holy Stone Enterprise Ltd’s shares before June 24th to qualify for the NT$5.00 per share dividend, which will be paid on July 19th.
Last year, the company paid a total of NT$5.00 to shareholders, resulting in a trailing yield of approximately 5.1% based on the current share price of NT$98.80. While we appreciate companies that pay dividends, it’s important to ensure that the company can afford to do so without compromising its financial health.
Holy Stone Enterprise Ltd distributed 119% of its profit as dividends last year, which may not be sustainable in the long run. Additionally, the company paid out 80% of its free cash flow, which could limit reinvestment in the business. Although the dividends were affordable from a cash perspective, paying out more than profits raises concerns about sustainability.
Earnings and dividends have been declining for Holy Stone Enterprise Ltd, with a 24% annual drop in earnings over the past five years. The company’s historical dividend growth rate has been modest at around 1.2% per year on average.
In conclusion, considering the decline in earnings, high payout ratios, and limited reinvestment in the business, it may be advisable to exercise caution when considering Holy Stone Enterprise Ltd as an investment. It’s important to assess the risks associated with the stock before making any decisions.