Chu Kong Shipping Enterprises (Group) Company Limited (HKG:560) Pays A HK$0.015 Dividend In Just Three Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Chu Kong Shipping Enterprises (Group) Company Limited (HKG:560) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be two business days 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Chu Kong Shipping Enterprises (Group)'s shares on or after the 4th of June, you won't be eligible to receive the dividend, when it is paid on the 29th of June.
The company's next dividend payment will be HK$0.015 per share. Last year, in total, the company distributed HK$0.025 to shareholders. Based on the last year's worth of payments, Chu Kong Shipping Enterprises (Group) stock has a trailing yield of around 3.6% on the current share price of HK$0.70. 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! We need to see whether the dividend is covered by earnings and if it's growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Chu Kong Shipping Enterprises (Group) paid out more than half (54%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (72%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
View our latest analysis for Chu Kong Shipping Enterprises (Group)
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. It's not encouraging to see that Chu Kong Shipping Enterprises (Group)'s earnings are effectively flat 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. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Chu Kong Shipping Enterprises (Group)'s dividend payments per share have declined at 12% per year on average over the past 10 years, which is uninspiring.
Final Takeaway
Has Chu Kong Shipping Enterprises (Group) got what it takes to maintain its dividend payments? Chu Kong Shipping Enterprises (Group) has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear unsustainable. To summarise, Chu Kong Shipping Enterprises (Group) looks okay on this analysis, although it doesn't appear a stand-out opportunity.
So if you want to do more digging on Chu Kong Shipping Enterprises (Group), you'll find it worthwhile knowing the risks that this stock faces. To help with this, we've discovered 3 warning signs for Chu Kong Shipping Enterprises (Group) that you should be aware of before investing in their 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.