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It looks like Hallenstein Glasson Holdings Limited (NZSE:HLG) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Hallenstein Glasson Holdings' shares before the 5th of December in order to be eligible for the dividend, which will be paid on the 13th of December.
The company's next dividend payment will be NZ$0.3003541 per share, on the back of last year when the company paid a total of NZ$0.53 to shareholders. Based on the last year's worth of payments, Hallenstein Glasson Holdings stock has a trailing yield of around 6.9% on the current share price of NZ$7.70. If you buy this business for its dividend, you should have an idea of whether Hallenstein Glasson Holdings'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.
See our latest analysis for Hallenstein Glasson Holdings
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. It paid out 87% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings. 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. It distributed 41% of its free cash flow as dividends, a comfortable payout level for most companies.
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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Hallenstein Glasson Holdings earnings per share are up 3.5% per annum over the last five years. A high payout ratio of 87% generally happens when a company can't find better uses for the cash. Combined with slim earnings growth in the past few years, Hallenstein Glasson Holdings could be signalling that its future growth prospects are thin.