Interested In Changzhou Langbo Sealing TechnologiesLtd's (SHSE:603655) Upcoming CN¥0.07 Dividend? You Have Three Days Left

Changzhou Langbo Sealing Technologies Co.,Ltd. (SHSE:603655) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Changzhou Langbo Sealing TechnologiesLtd's shares on or after the 16th of July, you won't be eligible to receive the dividend, when it is paid on the 16th of July.

The company's next dividend payment will be CN¥0.07 per share. Last year, in total, the company distributed CN¥0.07 to shareholders. Based on the last year's worth of payments, Changzhou Langbo Sealing TechnologiesLtd stock has a trailing yield of around 0.5% on the current share price of CN¥14.78. If you buy this business for its dividend, you should have an idea of whether Changzhou Langbo Sealing TechnologiesLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Changzhou Langbo Sealing TechnologiesLtd

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. Fortunately Changzhou Langbo Sealing TechnologiesLtd's payout ratio is modest, at just 33% of profit. 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. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Changzhou Langbo Sealing TechnologiesLtd'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.

Click here to see how much of its profit Changzhou Langbo Sealing TechnologiesLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Changzhou Langbo Sealing TechnologiesLtd's earnings per share have dropped 5.3% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Changzhou Langbo Sealing TechnologiesLtd has seen its dividend decline 5.8% per annum on average over the past six years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Is Changzhou Langbo Sealing TechnologiesLtd an attractive dividend stock, or better left on the shelf? Earnings per share have fallen significantly, although at least Changzhou Langbo Sealing TechnologiesLtd paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Changzhou Langbo Sealing TechnologiesLtd's dividend merits.

So if you want to do more digging on Changzhou Langbo Sealing TechnologiesLtd, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 2 warning signs for Changzhou Langbo Sealing TechnologiesLtd (1 is a bit concerning) you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com