Three Days Left To Buy EuroEyes International Eye Clinic Limited (HKG:1846) Before The Ex-Dividend Date

EuroEyes International Eye Clinic Limited (HKG:1846) is about to trade ex-dividend in the next three 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 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 EuroEyes International Eye Clinic's shares before the 3rd of July to receive the dividend, which will be paid on the 24th of July.

The company's upcoming dividend is HK$0.0126 a share, following on from the last 12 months, when the company distributed a total of HK$0.044 per share to shareholders. Looking at the last 12 months of distributions, EuroEyes International Eye Clinic has a trailing yield of approximately 1.8% on its current stock price of HK$2.40. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether EuroEyes International Eye Clinic has been able to grow its dividends, or if the dividend might be cut.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. EuroEyes International Eye Clinic paid out a comfortable 26% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 13% of its free cash flow last year.

It's positive to see that EuroEyes International Eye Clinic's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for EuroEyes International Eye Clinic

Click here to see how much of its profit EuroEyes International Eye Clinic 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. So we're not too excited that EuroEyes International Eye Clinic's earnings are down 3.1% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past five years, EuroEyes International Eye Clinic has increased its dividend at approximately 8.1% a year on average.

The Bottom Line

Is EuroEyes International Eye Clinic an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. To summarise, EuroEyes International Eye Clinic looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while EuroEyes International Eye Clinic has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 3 warning signs for EuroEyes International Eye Clinic (of which 1 shouldn't be ignored!) you should know about.

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.

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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.