In This Article:
VICOM Ltd (SGX:WJP) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase VICOM's shares before the 15th of August in order to receive the dividend, which the company will pay on the 23rd of August.
The company's next dividend payment will be S$0.028 per share, and in the last 12 months, the company paid a total of S$0.055 per share. Looking at the last 12 months of distributions, VICOM has a trailing yield of approximately 4.1% on its current stock price of S$1.34. If you buy this business for its dividend, you should have an idea of whether VICOM's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for VICOM
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. VICOM is paying out an acceptable 70% of its profit, a common payout level among most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The company paid out 96% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.
VICOM paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were VICOM to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Click here to see how much of its profit VICOM paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that VICOM's earnings are down 4.3% a year over the past five years.