Regular readers know that we at Simply Wall St take dividends seriously, which is why it’s exciting to see that Infortrend Technology, Inc. (TWSE:2495) is hitting its ex-date in the next three days. Typically, the ex-date is one business day before the record date, which is the day the company determines which shareholders are eligible to receive the dividend. The ex-date is important because it takes two full business days for the settlement process, so if you miss it, it won’t be recorded in the company’s books on the record date. This means that you’ll need to buy Infortrend Technology shares by July 25th to receive the dividend paid on August 27th.
The company’s upcoming dividend will be NT$0.70 per share, following on from the company distributing a total of NT$0.70 per share to shareholders over the last 12 months. Calculating dividends over the past year shows that Infortrend Technology has a yield of 2.2% on its current share price of NT$32.40. Dividends can be a major contribution to investment returns for long term holders, but only if the dividend continues to be paid. Therefore, readers should always check whether Infortrend Technology has managed to grow its dividends or whether the dividend might be cut.
Read our latest analysis for Infortrend Technology
If a company pays out more in dividends than it earned, the dividend may become unsustainable – never an ideal situation. The company’s dividend payout ratio was 79% of profits, which means the company is distributing a large portion of its profits. With relatively limited profit reinvestment, future earnings growth may slow. If earnings start to decline, this could be a concern. However, cash flow is usually more important than profits for assessing dividend sustainability, so we should always check if a company was generating enough cash to pay its dividend. The company paid out more than half (64%) of its free cash flow in the past year, which is within the average range for most companies.
It’s encouraging to see that the dividend is covered by both profits and cash flow, as this generally suggests the dividend is sustainable, as long as earnings don’t fall precipitously.
To see how much of its profit Infortrend Technology paid out over the last 12 months, click here.
TWSE:2495 July 21, 2024 Historical Dividend
Are profits and dividends increasing?
Stocks in companies that generate sustainable earnings growth often have the best dividend prospects, as it’s easier to raise dividends when earnings are rising. If earnings fall sharply, companies may be forced to cut the dividend. That’s why it’s reassuring to see that Infotrend Technology’s profits have been rising sharply, up 20% per year over the past five years. The company pays out more than three-quarters of its profits as dividends, yet earnings growth has been solid.
Many investors assess a company’s dividend performance by evaluating how much the dividend has changed over time. Since starting our data 10 years ago, Infortrend Technology has grown its dividends by approximately 17% per year on average. Both earnings per share and dividends have been growing rapidly recently, which is great to see.
summary
Will Infortrend Technology be able to sustain its dividend payments? Generally, higher earnings per share will lead to higher dividends from dividend-paying stocks over the long term. That’s why we’re glad to see Infortrend Technology’s earnings per share are growing. However, as we mentioned earlier, the company is paying out more than half of its earnings and cash flow (79% and 64%, respectively). In summary, while Infortrend Technology has some good features, we wouldn’t rush out to buy Infortrend Technology today.
While it can be tempting to invest in Infortrend Technology solely for the dividends, you should always be mindful of the risks involved, as an example, we’ve spotted 3 warning signs for Infortrend Technology you should be aware of.
If you’re looking for stocks with high dividends, we recommend checking out our picks of the top dividend stocks.
Valuation is complicated, but we can help make it simple.
Find out if Infortrend Technology is overvalued or undervalued by checking our comprehensive analysis including fair value estimates, risks and warnings, dividends, insider transactions, financials and more.
View free analysis
Have feedback about this article? Concerns about the content? Please contact us directly or email us at editorial-team (at) simplywallst.com.
This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
Valuation is complicated, but we can help make it simple.
Find out if Infortrend Technology is overvalued or undervalued by checking our comprehensive analysis including fair value estimates, risks and warnings, dividends, insider transactions, financials and more.
View free analysis
Have something to say about this article? If you have any questions about the content, please contact us directly or email us at editorial-team@simplywallst.com.
