It looks like Sin Heng Heavy Machinery Limited (SGX:BKA) is about to go ex-dividend in the next two days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Thus, you can purchase Sin Heng Heavy Machinery's shares before the 3rd of May in order to receive the dividend, which the company will pay on the 12th of May.

The company's next dividend payment will be S$0.035 per share. Last year, in total, the company distributed S$0.035 to shareholders. Looking at the last 12 months of distributions, Sin Heng Heavy Machinery has a trailing yield of approximately 8.1% on its current stock price of SGD0.43. 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 Sin Heng Heavy Machinery has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Sin Heng Heavy Machinery

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Sin Heng Heavy Machinery paying out a modest 31% of its 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.

Click here to see how much of its profit Sin Heng Heavy Machinery paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Sin Heng Heavy Machinery's earnings per share have been growing at 13% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sin Heng Heavy Machinery's dividend payments per share have declined at 3.5% per year on average over the past 10 years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

To Sum It Up

Should investors buy Sin Heng Heavy Machinery for the upcoming dividend? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. In summary, it's hard to get excited about Sin Heng Heavy Machinery from a dividend perspective.

On that note, you'll want to research what risks Sin Heng Heavy Machinery is facing. To help with this, we've discovered 3 warning signs for Sin Heng Heavy Machinery that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.