Readers who want to buy DIOD manufacturer of environmentally friendly equipment and nutrition joint-stock company (MCX: DIOD) for its dividend is about to make its move as the stock is about to trade ex dividend. The ex-dividend day is one business day prior to a company’s record date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the settlement process spans two full business days. So if you missed that deadline, you wouldn’t be on the company’s books on the deadline. In other words, investors can purchase DIOD Maker of Eco-Friendly Equipment and Nutrition’s shares before July 15th to be eligible for the dividend, which will be paid on January 1st.
The company’s next dividend payment will be 0.65 yen per share, compared to last year when the company paid out a total of 0.65 yen to shareholders. Calculating last year’s payments shows that DIOD Maker of Eco-Friendly Equipment and Nutrition has a trailing return of 6.7% on the current share price of 9.65 rubles. Dividends are an important source of income for many shareholders, but the health of the company is critical to sustaining those dividends. Therefore, we should always check whether the dividend payments appear sustainable and the company is growing.
Check out our latest analysis for DIOD Maker of Eco-Friendly Equipment and Nutrition
Dividends are usually paid out of company earnings. So when a company pays out more than it earned, there is usually a higher risk of its dividend being cut. DIOD Maker of Eco-Friendly Equipment and Nutrition paid an unsustainably high 160% of its profits to shareholders as dividends last year. Without more sustainable payment behavior, the dividend looks precarious. However, even highly profitable companies sometimes don’t generate enough cash to pay the dividend, which is why we should always check whether the dividend is covered by cash flow. Fortunately, dividend payments only accounted for 44% of the free cash flow generated, which is a comfortable payout ratio.
It’s disappointing to see that the dividend wasn’t covered by profits, but cash is more important from a dividend sustainability perspective, and fortunately DIOD Maker of Eco-Friendly Equipment and Nutrition has generated enough money to fund its dividend. If executives continue to pay more dividends than the company has reported in profits, we would take this as a warning sign. Extremely few companies are able to consistently pay dividends in excess of their earnings.
Click here to see how much of his winnings DIOD Maker of Eco-Friendly Equipment and Nutrition has paid out over the past 12 months.
MISX: DIOD historic dividend July 11, 2021
Have profits and dividends grown?
Stocks of companies with sustained earnings growth often offer the best dividend prospects because as earnings increase, it is easier to increase the dividend. If earnings plummet enough, the company could be forced to cut its dividend. So it’s comforting to see that DIOD Maker of Eco-Friendly Equipment and Nutrition’s revenues have skyrocketed over the past five years, increasing 73% per year.
Many investors will judge a company’s dividend performance by assessing how much dividend payments have changed over time. DIOD Maker of Eco-Friendly Equipment and Nutrition has averaged 11% dividend growth per year for the past four years. It’s great to see earnings per share grow rapidly over several years and dividend per share grow at the same time.
The bottom line
Is DIOD Maker of Eco-Friendly Equipment and Nutrition an Attractive Dividend Stock, or Better on the Shelf? Earnings per share have risen well, although despite the low cash flow payout ratio, we doubt why DIOD Maker of Eco-Friendly Equipment and Nutrition pays out so much of its earnings. All in all, from a dividend perspective, we’re not particularly thrilled with DIOD Maker of Eco-Friendly Equipment and Nutrition.
While DIOD Maker of Eco-Friendly Equipment and Nutrition looks great from a dividend standpoint, it’s always worth keeping up to date on the risks of this stock. For example – DIOD Maker of Eco-Friendly Equipment and Nutrition has 4 warning signs We think you should be aware of this.
A common investment mistake is buying the first interesting stock you see. Here is a list of promising dividend stocks with a yield greater than 2% and an upcoming dividend.
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This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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