It looks like Wai Yuen Tong Medicine Holdings Limited (HKG:897) is about to go ex-dividend in the next 3 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Wai Yuen Tong Medicine Holdings' shares on or after the 22nd of August will not receive the dividend, which will be paid on the 6th of September.

The company's next dividend payment will be HK$0.177 per share. Last year, in total, the company distributed HK$0.03 to shareholders. Based on the last year's worth of payments, Wai Yuen Tong Medicine Holdings stock has a trailing yield of around 8.0% on the current share price of HK$0.375. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Wai Yuen Tong Medicine Holdings has been able to grow its dividends, or if the dividend might be cut.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Wai Yuen Tong Medicine Holdings reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

Click here to see how much of its profit Wai Yuen Tong Medicine Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Wai Yuen Tong Medicine Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Wai Yuen Tong Medicine Holdings has seen its dividend decline 6.7% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

We update our analysis on Wai Yuen Tong Medicine Holdings every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

Should investors buy Wai Yuen Tong Medicine Holdings for the upcoming dividend? All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

With that in mind though, if the poor dividend characteristics of Wai Yuen Tong Medicine Holdings don't faze you, it's worth being mindful of the risks involved with this business. For example, we've found 4 warning signs for Wai Yuen Tong Medicine Holdings (1 shouldn't be ignored!) that deserve your attention before investing in the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.