Interested in ShunSin Technology Holdings’ (TWSE:6451) Upcoming NT$2.46 Dividend? You have 3 days left

It resembles ShunSin Technology Holdings Limited (TWSE:6451) will go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company’s record date, the date on which the company determines which shareholders are entitled to dividends. The ex-dividend date is significant because when a stock is bought or sold, the transaction takes at least two business days to settle. This means that investors who buy ShunSin Technology Holdings shares on or after July 25 will not receive the dividend, which is paid on August 23.

The company’s next dividend payment will be NT$2.46 per share. Last year, the company distributed a total of NT$2.46 to shareholders. Based on the last year’s payments, ShunSin Technology Holdings has a trailing yield of 1.0% on the current share price of NT$241.00. If you buy this company for its dividend, you should have some idea of ​​whether ShunSin Technology Holdings’ dividend is reliable and sustainable. So, we need to check if the dividend payments are covered, and if the company is growing earnings.

View our latest analysis for ShunSin Technology Holdings

Dividends are typically paid out of the company’s profits. If a company pays out more in dividends than it earns in profits, the dividend may be unsustainable. The dividend payout ratio is 89% of profits, meaning that the company is paying out most of its profits. The relatively low reinvestment of profits could slow future profit growth. We would be concerned if profits started to decline. However, cash flow is typically more important than profits when assessing the sustainability of dividends, so we should always check that the company has generated enough cash to pay its dividend. The good news is that the company paid out just 19% of its free cash flow over the past year.

It is positive to see that ShunSin Technology Holdings’ dividend is covered by both profits and cash flow. This is generally a sign that the dividend is sustainable, and a lower payout ratio usually indicates a greater margin of safety before the dividend gets cut.

Click here to see how much profit ShunSin Technology Holdings has paid out over the last 12 months.

Have profits and dividends increased?

Stocks with flat earnings can still be attractive dividend payers, but it’s important to be more conservative in your approach and require a greater margin of safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. It’s not encouraging to see that ShunSin Technology Holdings’ earnings have been effectively flat over the past five years. We’d take that over a decline in earnings any day, but over the long term, the best dividend stocks all grow their earnings per share.

Many investors judge a company’s dividend performance by evaluating how much its dividend payments have changed over time. ShunSin Technology Holdings has seen its dividend decline by an average of 12% per year over the past nine years, which isn’t great to see.

It comes down to

Should investors buy or avoid ShunSin Technology Holdings from a dividend perspective? We’re not excited about the flat earnings per share, although the company’s payout ratio is at least within reasonable limits. Furthermore, it paid out a lower percentage of its free cash flow, so at least it generated more cash than it spent on dividends. In short, it’s hard to get excited about ShunSin Technology Holdings from a dividend perspective.

That said, if dividends aren’t your biggest concern with ShunSin Technology Holdings, you should be aware of the other risks that come with this business. For example, we’ve found 3 Warning Signs for ShunSin Technology Holdings (2 don’t sit so well with us!) that deserve your attention before investing in the shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a complete list of high yielding dividend stocks.

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This article from Simply Wall St is general in nature. We comment solely on historical data and analyst forecasts, using an objective methodology. Our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your objectives or financial situation. We aim to provide you with a long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in the shares mentioned.

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