Why It Might Not Make Sense To Buy Scott Technology Limited (NZSE:SCT) For Its Upcoming Dividend

Regular readers will know that we love our prices at Simply Wall St, so it’s exciting to see. Scott Technology Limited (NZSE:SCT) is set to trade in pre-shares over the next four days. The ex-dividend date is the business day before the record date, which is the cut-off date for shareholders on the company’s books to be eligible for dividend payments. The date of the previous split is important as it takes two full business days in the settlement process. So, if you miss that date, you will not show up in the company’s books on the record date. Basically, you have to buy Scott Technology shares by November 4th to receive the dividend, which will be paid on November 22nd.

The company’s future share price is NZ$0.04 per share, after the last 12 months, the company distributed a total of NZ$0.08 per share to shareholders. Last year’s total dividend yield shows that Scott Technology has a trailing profit of 2.7% on a share price of NZ$2.91. We love to see companies that pay dividends, but it’s also important to know that the placement of golden products will not kill our golden geese! So let’s see if the wages are covered, and if the income is growing.

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See the opportunities and risks in XX Mechanical Industry.

Dividends are paid out of company funds. If the company pays more than the profits it earns, the price may not be sustainable. Scott Technology paid out 50% of its earnings to investors last year, which is a normal level for most businesses. That said, even profitable companies sometimes don’t have enough money to cover the cost, so always check if the cost is covered by the cash flow. Scott Technology paid the price despite giving free negative feedback for the past twelve months. This may be due to the high investment in the business, but this is still low from a cost-effectiveness point of view.

Click here to see how much Scott Technology has paid out over the past 12 months.

divisional history
NZSE:SCT Historic Dividend October 30th 2022

Are profits and dividends growing?

Businesses with strong growth are usually the best dividend stocks, because it’s easier to grow profits when earnings per share increase. If earnings decline and the company is forced to cut costs, investors may watch the value of their investments increase. That’s why it’s heartening to see Scott Technology’s earnings per share increase 3.6% annually over the past five years.

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The main way for most investors to assess a company’s earnings prospects is to examine the historical rate of earnings growth. Scott Technology’s dividend payout is roughly where it was 10 years ago.

The Bottom Line

Is Scott Technology worth its price? Scott Technology is paying a fair percentage of its earnings and is very vulnerable -104% of its cash flow to pay. At least earnings per share have continued to grow. Bottom Line: Scott Technology has some downsides that we think will lead to less-than-optimal results for investors.

However, if you are still interested in Scott Technology and want to know more, it will be very useful for you to know what problems this animal can face. On investment problems, we have found 1 warning sign and Scott Technology and knowing them should be part of your investment plan.

Of course, we’re not suggesting that you just buy the first distribution package you see. Here it is A list of interesting stocks that have the ability to pay dividends.

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Value is hard, but we’re helping make it easy.

Find out if Scott Technology more or less value by checking our comprehensive analysis, included fair value estimation, risk and caution, dividends, internal transactions and financial health.

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This is a general statement by Simply Wall St. We provide information based on historical information and analyst forecasts using unbiased methods, and our articles are not intended as financial advice. It is not intended to be a recommendation to buy or sell any stock and does not take into account your goals or financial situation. We aim to bring you long-term focused analytics driven by original data. Note that our analysis may not include price-sensitive company updates or quality materials. Simply Wall St has no position in the mentioned stocks.

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