Income Investors Should Know That China Everbright Bank Company Limited (SHSE:601818) Goes Ex-Dividend Soon

China Everbright Bank Company Limited (SHSE:601818) is about to trade ex-dividend in the next day or two. 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 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. Thus, you can purchase China Everbright Bank's shares before the 22nd of January in order to receive the dividend, which the company will pay on the 22nd of January.

The company's next dividend payment will be CN¥0.104 per share, on the back of last year when the company paid a total of CN¥0.21 to shareholders. Looking at the last 12 months of distributions, China Everbright Bank has a trailing yield of approximately 5.6% on its current stock price of CN¥3.71. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether China Everbright Bank has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for China Everbright Bank

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately China Everbright Bank's payout ratio is modest, at just 46% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that China Everbright Bank's earnings are down 2.5% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, China Everbright Bank has increased its dividend at approximately 1.9% a year on average.

To Sum It Up

Has China Everbright Bank got what it takes to maintain its dividend payments? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

However if you're still interested in China Everbright Bank as a potential investment, you should definitely consider some of the risks involved with China Everbright Bank. To help with this, we've discovered 1 warning sign for China Everbright Bank that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.