Readers considering purchasing Hello World Travel Limited (ASX:HLO) will need to act soon to claim its dividend, as the share price is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date, which is the date on which the company determines which shareholders are eligible to receive dividends. The ex-dividend date is important because trades in the stock must be settled before the record date in order to receive the dividend. Therefore, if he purchases shares in Helloworld Travel after March 7th, he will not be entitled to receive the dividend, although it will be paid on March 22nd.
The company's upcoming dividend is AU$0.05 per share, following the company's distribution of a total of AU$0.11 per share to shareholders in the last 12 months. Looking at the past 12 months of distributions, Helloworld Travel has a yield of approximately 4.0% on its current share price of AU$2.76. We love to see companies pay dividends, but it's also important to make sure our golden goose doesn't die by laying golden eggs. As a result, readers should always check whether Helloworld Travel has been able to grow its dividends, or if the dividends could be cut.
Check out our latest analysis for Helloworld Travel.
Dividends are typically paid out of company profits, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Helloworld Travel pays out 51% of its profits, which is a common payout level for most companies. However, cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if a company generated enough cash to pay its dividend. What's good is that the dividend is well covered by free cash flow, with the company paying out 22% of its cash flow last year.
It's positive to see that Helloworld Travel'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?
Declining profits make dividend companies much harder to analyze and own safely. If profits decline and the company is forced to cut its dividend, investors could see the value of their investments explode. So we're not too excited to see that Helloworld Travel's revenue has fallen by 4.2% per year over the past five years.
Many investors assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Over the past 10 years, Helloworld Travel has grown its dividend at an average annual rate of approximately 6.2%. Increasing the payout ratio while profits are falling can yield significant temporary benefits, but it's always worth checking when the company can no longer increase the payout ratio . Because then the music will stop.
conclusion
Is Helloworld Travel worth buying for its dividend? At least the company's payout ratio is within a reasonable range, so it may not be at immediate risk of a dividend cut, but a decline in earnings per share may We are not impressed. In summary, it's hard to get excited about Helloworld Travel from a dividend perspective.
Even if you're not too worried about Helloworld Travel's ability to pay its dividend, you should be aware of some of the other risks facing this business. In terms of investment risk, We've identified 2 warning signs Using Helloworld Travel and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, 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.
