Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Keck Seng Investments (Hong Kong) Limited (HKG:184) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. In other words, investors can purchase Keck Seng Investments (Hong Kong)'s shares before the 2nd of June in order to be eligible for the dividend, which will be paid on the 30th of June.

The company's next dividend payment will be HK$0.04 per share. Last year, in total, the company distributed HK$0.04 to shareholders. Looking at the last 12 months of distributions, Keck Seng Investments (Hong Kong) has a trailing yield of approximately 1.6% on its current stock price of HK$2.45. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Keck Seng Investments (Hong Kong) can afford its dividend, and if the dividend could grow.

See our latest analysis for Keck Seng Investments (Hong Kong)

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. Keck Seng Investments (Hong Kong) 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. Keck Seng Investments (Hong Kong) paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit Keck Seng Investments (Hong Kong) 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Keck Seng Investments (Hong Kong) 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. Keck Seng Investments (Hong Kong)'s dividend payments per share have declined at 15% per year on average over the past 10 years, which is uninspiring. 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.

Remember, you can always get a snapshot of Keck Seng Investments (Hong Kong)'s financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Should investors buy Keck Seng Investments (Hong Kong) for the upcoming dividend? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that in mind though, if the poor dividend characteristics of Keck Seng Investments (Hong Kong) don't faze you, it's worth being mindful of the risks involved with this business. We've identified 2 warning signs with Keck Seng Investments (Hong Kong) (at least 1 which is potentially serious), and understanding these should be part of your investment process.

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.

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.