It Might Not Be A Great Idea To Buy UBoT Holding Limited (HKG:8529) For Its Next Dividend

UBoT Holding Limited (HKG:8529) stock is about to trade ex-dividend in 2 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase UBoT Holding's shares on or after the 28th of May will not receive the dividend, which will be paid on the 2nd of June.

The company's upcoming dividend is HK$0.009 a share, following on from the last 12 months, when the company distributed a total of HK$0.018 per share to shareholders. Based on the last year's worth of payments, UBoT Holding stock has a trailing yield of around 3.5% on the current share price of HK$0.52. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. UBoT Holding paid out more than half (60%) of its earnings last year, which is a regular payout ratio for most companies.

Check out our latest analysis for UBoT Holding

Click here to see how much of its profit UBoT Holding paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see UBoT Holding's earnings per share have dropped 19% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Unfortunately UBoT Holding has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

From a dividend perspective, should investors buy or avoid UBoT Holding? We're not overly enthused to see UBoT Holding's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in UBoT Holding and want to know more, you'll find it very useful to know what risks this stock faces. To that end, you should learn about the 3 warning signs we've spotted with UBoT Holding (including 2 which shouldn't be ignored).

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