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Mandarin Oriental International Limited (SGX:M04) is about to trade ex-dividend in the next three days. The ex-dividend date is commonly two business days 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Mandarin Oriental International's shares before the 20th of March in order to be eligible for the dividend, which will be paid on the 14th of May.
The company's next dividend payment will be US$0.035 per share, and in the last 12 months, the company paid a total of US$0.05 per share. Last year's total dividend payments show that Mandarin Oriental International has a trailing yield of 2.8% on the current share price of US$1.76. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Mandarin Oriental International has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Mandarin Oriental International
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Mandarin Oriental International reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Mandarin Oriental International didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Over the past year it paid out 120% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.
Click here to see how much of its profit Mandarin Oriental International paid out over the last 12 months.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Mandarin Oriental International reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.