Anhui Gourgen Traffic Construction Co.,Ltd. (SHSE:603815) Pays A CN¥0.085 Dividend In Just Four Days

Anhui Gourgen Traffic Construction Co.,Ltd. (SHSE:603815) stock is about to trade ex-dividend in 4 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 Anhui Gourgen Traffic ConstructionLtd's shares on or after the 8th of July, you won't be eligible to receive the dividend, when it is paid on the 8th of July.

The company's next dividend payment will be CN¥0.085 per share. Last year, in total, the company distributed CN¥0.085 to shareholders. Based on the last year's worth of payments, Anhui Gourgen Traffic ConstructionLtd has a trailing yield of 1.5% on the current stock price of CN¥5.81. If you buy this business for its dividend, you should have an idea of whether Anhui Gourgen Traffic ConstructionLtd's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Anhui Gourgen Traffic ConstructionLtd

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Anhui Gourgen Traffic ConstructionLtd paid out a comfortable 32% of its profit last year. A useful secondary check can be to evaluate whether Anhui Gourgen Traffic ConstructionLtd generated enough free cash flow to afford its dividend. Over the past year it paid out 157% of its free cash flow as dividends, which is uncomfortably high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

While Anhui Gourgen Traffic ConstructionLtd's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Anhui Gourgen Traffic ConstructionLtd's ability to maintain its dividend.

Click here to see how much of its profit Anhui Gourgen Traffic ConstructionLtd paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Anhui Gourgen Traffic ConstructionLtd's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Anhui Gourgen Traffic ConstructionLtd has seen its dividend decline 4.0% per annum on average over the past four years, which is not great to see.

To Sum It Up

Has Anhui Gourgen Traffic ConstructionLtd got what it takes to maintain its dividend payments? Earnings per share have been effectively flat over this time, and Anhui Gourgen Traffic ConstructionLtd's paying out less than half its profits and 157% of its cash flow. It's not common to see a company paying out a limited amount of its profits yet a substantially higher percentage of its cash flow, so we'd flag this as a concern. To summarise, Anhui Gourgen Traffic ConstructionLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into Anhui Gourgen Traffic ConstructionLtd, it's worth knowing the risks this business faces. For example - Anhui Gourgen Traffic ConstructionLtd has 1 warning sign we think you should be aware of.

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