Asia Allied Infrastructure Holdings Limited (HKG:711) stock is about to trade ex-dividend in four 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. 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. Meaning, you will need to purchase Asia Allied Infrastructure Holdings' shares before the 19th of December to receive the dividend, which will be paid on the 5th of January.
The company's upcoming dividend is HK$0.011 a share, following on from the last 12 months, when the company distributed a total of HK$0.022 per share to shareholders. Based on the last year's worth of payments, Asia Allied Infrastructure Holdings has a trailing yield of 4.3% on the current stock price of HK$0.51. If you buy this business for its dividend, you should have an idea of whether Asia Allied Infrastructure Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Asia Allied Infrastructure Holdings has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Asia Allied Infrastructure Holdings
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. That's why it's good to see Asia Allied Infrastructure Holdings paying out a modest 29% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (62%) of its free cash flow in the past year, which is within an average range 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 how much of its profit Asia Allied Infrastructure Holdings paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Asia Allied Infrastructure Holdings's earnings are down 3.2% a year over the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Asia Allied Infrastructure Holdings has delivered an average of 4.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Should investors buy Asia Allied Infrastructure Holdings for the upcoming dividend? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
If you want to look further into Asia Allied Infrastructure Holdings, it's worth knowing the risks this business faces. We've identified 4 warning signs with Asia Allied Infrastructure Holdings (at least 2 which make us uncomfortable), and understanding these should be part of your investment process.
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.
