Only Three Days Left To Cash In On Hua Xia Bank's (SHSE:600015) Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Hua Xia Bank Co., Limited (SHSE:600015) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. This means that investors who purchase Hua Xia Bank's shares on or after the 21st of June will not receive the dividend, which will be paid on the 21st of June.

The company's upcoming dividend is CN¥0.384 a share, following on from the last 12 months, when the company distributed a total of CN¥0.38 per share to shareholders. Based on the last year's worth of payments, Hua Xia Bank has a trailing yield of 5.9% on the current stock price of CN¥6.53. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Hua Xia Bank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hua Xia Bank has a low and conservative payout ratio of just 25% of its income after tax.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Hua Xia Bank's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Hua Xia Bank has delivered an average of 4.3% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is Hua Xia Bank worth buying for its dividend? Hua Xia Bank's earnings per share are basically flat over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

If you want to look further into Hua Xia Bank, it's worth knowing the risks this business faces. To help with this, we've discovered 1 warning sign for Hua Xia Bank that you should be aware of before investing in their shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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