Is it wise to buy Willfar Information Technology Co., Ltd. (SHSE:688100) before its dividend goes ex-dividend?

Some investors rely on dividends to grow their wealth. If you're also a dividend expert, you might want to know: Wilfer Information Technology Co., Ltd. (SHSE:688100) will lose its dividend in the next 3 days. The ex-dividend date is one day before the record date. The record date is the date on which a shareholder must appear on the company's books in order to receive the dividend. The ex-dividend date is important because the settlement process takes two full business days. Therefore, if you miss that date, it will not be recorded on the company's books on the record date. Therefore, he can purchase shares of Willfar Information Technology before May 9th and receive the dividend that the company pays him on May 9th.

The company's upcoming dividend will be CN Yen 0.43 per share, following a total distribution of CN Yen 0.43 per share to shareholders over the past 12 months. Based on the last year's worth of payments, Wilfer Information Technology has a current yield of 1.2% on the current price of CA$34.79. Dividends can be a significant contributor to investment returns for long-term holders, but only if they continue to be paid. We need to see if the dividend is covered by profit and if it's growing.

Check out our latest analysis for Willfar Information Technology.

Dividends are usually paid out of a company's profits. If a company pays more in dividends than it earned in profit, then the dividend might become unsustainable. Willfar Information Technology paid out his 39% of its profit last year. That said, even highly profitable companies might not generate enough cash to pay the dividend, so we should always check if the dividend is covered by cash flow. It distributed 39% of its free cash flow as dividends, which is a comfortable dividend level for most companies.

It's positive to see that Wilfer Information Technology's dividend is covered by both profit and cash flow. This usually indicates that the dividend is sustainable, as a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio and analyst estimates of its future dividends.

Are profits and dividends growing?

Companies with promising growth potential are usually the ones that pay the most dividends, since it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is cut, you can expect the stock to sell off heavily at the same time. That's why it's reassuring to see Willfar Information Technology's earnings have soared, increasing 23% per year over the past five years. Earnings per share are growing very quickly, and the company accounts for a relatively low percentage of profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks because they can pay out a higher proportion of their earnings while growing their earnings, essentially doubling their dividends.

Another important way to measure a company's dividend prospects is by measuring its historical dividend growth rate. Since the beginning of our data four years ago, Willfar Information Technology has raised its dividend by an average of about 25% per year. It's interesting to see that both his earnings per share and dividends have grown rapidly over the past few years.

final point

Is Willfar Information Technology an attractive dividend stock, or is it better left on the shelf? Willfar Information Technology is increasing its earnings per share while at the same time increasing both its earnings and cash flow payments. I'm glad the percentage is low. These characteristics suggest the company is reinvesting to grow its business, while the conservative payout ratio also suggests a low risk of the dividend being cut in the future. There's a lot to like about Willfar Information Technology, so we'll make it a priority to take a closer look.

In that regard, you should investigate what risks Willfar Information Technology faces. For example, I found that: 1 warning sign for Willfar Information Technology We recommend that you consider this before investing in your business.

Generally speaking, we don't recommend just buying the first dividend stock you see.Here it is A curated list of interesting stocks with strong dividends.

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