Readers wishing to buy Luks Group (Vietnam Holdings) Company Limited (HKG: 366) for its dividend will have to act shortly, as the stock is about to trade off dividend. The ex-dividend date occurs one day before the record date, which is the day on which shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. Therefore, if you buy shares of Luks Group (Vietnam Holdings) on or after June 16, you will not be able to receive the dividend when it is paid on July 6.
The company’s next dividend payment will be HK $ 0.03 per share. Last year, in total, the company distributed HK $ 0.05 to shareholders. Calculation of the value of payments from last year shows that Luks Group (Vietnam Holdings) has a rolling 3.7% return on the current share price of HK $ 1.35. If you buy this company for its dividend, you should know if the dividend from Luks Group (Vietnam Holdings) is reliable and sustainable. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.
See our latest analysis for Luks Group (Vietnam Holdings)
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Fortunately, the payout ratio of Luks Group (Vietnam Holdings) is modest, at only 41% of profits. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by the cash flow. It distributed 27% of its free cash flow in the form of dividends, a comfortable level of distribution for most companies.
It is positive to see that the Luks Group (Vietnam Holdings) dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio suggests. generally a greater margin of safety before the dividend. cut himself.
Click here to see how much of its Profit Luks Group (Vietnam Holdings) has paid in the past 12 months.
Have profits and dividends increased?
Companies with declining profits are riskier for dividend shareholders. If business goes into recession and the dividend is reduced, the company could experience a sharp drop in value. Readers will then understand why we are concerned to see Luks Group (Vietnam Holdings) earnings per share fall 7.2% per year over the past five years. Such a sudden drop casts doubt on the future sustainability of the dividend.
Most investors primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Luks Group (Vietnam Holdings) dividend payouts per share have declined 6.7% per year on average over the past 10 years, which is not inspiring. While it’s not great that earnings and dividends per share have come down in recent years, we’re encouraged that management has cut the dividend rather than risking over-committing the company in a risky attempt to maintain returns for shareholders.
The bottom line
From a dividend perspective, should investors buy or avoid Luks Group (Vietnam Holdings)? Luks Group (Vietnam Holdings) has comfortably low cash flow and earnings payout ratios, which may mean that the dividend is sustainable even in the face of a sharp drop in earnings per share. Nonetheless, we consider declining profits to be a harbinger. In summary, although it has some positive characteristics, we are not inclined to rush and buy Luks Group (Vietnam Holdings) today.
On that note, you’ll want to research the risks that Luks Group (Vietnam Holdings) faces. For example, we found 3 warning signs for Luks Group (Vietnam Holdings) which we recommend that you consider before investing in the business.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend ahead.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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