Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Kina Securities Limited (ASX:KSL) is about to trade ex-dividend in the next 2 days. You can purchase shares before the 28th of August in order to receive the dividend, which the company will pay on the 26th of September.
Kina Securities's next dividend payment will be K0.04 per share. Last year, in total, the company distributed K0.22 to shareholders. Based on the last year's worth of payments, Kina Securities stock has a trailing yield of around 7.0% on the current share price of A$1.38. If you buy this business for its dividend, you should have an idea of whether Kina Securities's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Kina Securities paid out more than half (71%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Kina Securities's earnings have been skyrocketing, up 96% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 4 years ago, Kina Securities has lifted its dividend by approximately 32% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Has Kina Securities got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Kina Securities is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Kina Securities ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
Want to learn more about Kina Securities? Here's a visualisation of its historical rate of revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.