Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that HiVi Acoustics Technology Co., Ltd (SZSE:002888) is about to go ex-dividend in just three 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. Accordingly, HiVi Acoustics Technology investors that purchase the stock on or after the 12th of June will not receive the dividend, which will be paid on the 12th of June.

The company's next dividend payment will be CN¥0.068 per share, on the back of last year when the company paid a total of CN¥0.068 to shareholders. Looking at the last 12 months of distributions, HiVi Acoustics Technology has a trailing yield of approximately 0.6% on its current stock price of CN¥11.38. If you buy this business for its dividend, you should have an idea of whether HiVi Acoustics Technology's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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. HiVi Acoustics Technology paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see how much of its profit HiVi Acoustics Technology 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. If earnings fall far enough, the company could be forced to cut its dividend. HiVi Acoustics Technology 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. HiVi Acoustics Technology has seen its dividend decline 7.9% per annum on average over the past six years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

We update our analysis on HiVi Acoustics Technology every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Has HiVi Acoustics Technology got what it takes to maintain its dividend payments? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that being said, if you're still considering HiVi Acoustics Technology as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 2 warning signs for HiVi Acoustics Technology (1 can't be ignored!) that you ought to be aware of before buying the shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.