Regular readers will know that we love dividends at Simple Wall Street, which is why it’s exciting to see scott technology co., ltd. (NZSE:SCT) is about to trade ex-dividend over the next four days. The ex-dividend date is the business day preceding the record date, which is the deadline for shareholders to appear on the company’s books to qualify for dividend payments. The ex-dividend date is important because the settlement process involves two full business days. Therefore, if you miss that date, you will not appear on the company’s books of record on the date. This means that you need to buy shares in Scott Technology by November 4th to receive the dividend, which will be paid on November 22nd.
The company’s upcoming dividend is NZ$0.04 per share, after 12 months of distribution to shareholders of NZ$0.08 per share. Last year’s total dividend payments show Scott Technology’s current share price at NZ$2.91, with a trailing yield of 2.7%. We love seeing companies pay dividends, but it’s also important to make sure that laying golden eggs doesn’t kill our golden geese! So we need to check if dividends are paid and if earnings are growing.
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Dividends are usually paid out of company earnings. If a company pays more dividends than it earns, the dividends may not be sustainable. Scott Technology paid investors 50% of earnings last year, a normal payout level for most businesses. That said, even highly profitable companies may sometimes fail to generate enough cash to pay dividends, which is why we should always check whether dividends are covered by cash flow. Scott Technology paid a dividend despite reporting negative free cash flow for the trailing twelve months. This may be due to heavy investment in the business, but it’s still not optimal from a dividend sustainability perspective.
Click here to see how much profit Scott Technology has paid out over the past 12 months.
Are earnings and dividends growing all the time?
Businesses with strong growth prospects are often the best dividend payers because it’s easier to increase dividends when EPS improves. If earnings fall and the company is forced to cut its dividend, investors could watch the value of their investments evaporate. That’s why it’s comforting to see Scott Technology’s EPS grow 3.6% annually over the past five years.
The primary way that most investors evaluate a company’s dividend prospects is to examine the history of dividend growth rates. Scott Technology’s dividend payment is virtually the same as it was 10 years ago.
bottom line
Is Scott Tech’s Dividend a Buy? Scott Technology pays out a reasonable percentage of revenue and an uncomfortably high cash flow of -104% as a dividend. Earnings per share, at least, have been growing steadily. Bottom Line: Scott Technology has some unfortunate features that we believe could lead to suboptimal results for dividend investors.
Although, if you’re still interested in Scott Technology and want to learn more, you’ll find it useful to understand the risks to this stock. In terms of investment risk, We found 1 warning sign Working with Scott Technology and learning about them should be part of your investing process.
In general, we don’t recommend just buying the first dividend stock you see.Lord’s A curated list of interesting stocks that are strong dividend payers.
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find out if Scott Technology May be over or underestimated by viewing our comprehensive analysis, which includes Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Condition.
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This article by Simply Wall St is general in nature. We provide commentary based solely on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to provide financial advice. It does not constitute advice to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to bring you long-term focused analytics driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Wall Street has no positions in any of the stocks mentioned.