In This Article:
Yip's Chemical Holdings Limited (HKG:408) stock is about to trade ex-dividend in 3 days time. If you purchase the stock on or after the 6th of September, you won't be eligible to receive this dividend, when it is paid on the 10th of October.
Yip's Chemical Holdings's next dividend payment will be HK$0.07 per share, and in the last 12 months, the company paid a total of HK$0.16 per share. Based on the last year's worth of payments, Yip's Chemical Holdings stock has a trailing yield of around 7.0% on the current share price of HK$2.3. 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! So we need to investigate whether Yip's Chemical Holdings can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Yip's Chemical Holdings
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Yip's Chemical Holdings paid out 52% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 12% of its free cash flow as dividends last year, which is conservatively low.
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.
Click here to see how much of its profit Yip's Chemical Holdings paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Yip's Chemical Holdings's earnings per share have fallen at approximately 5.9% a year over the previous 5 years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Yip's Chemical Holdings's dividend payments per share have declined at 4.4% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.