Ningbo Deye Technology Group Co., Ltd. (SHSE:605117) Pays A CN¥2.10 Dividend In Just Two Days

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 Ningbo Deye Technology Group Co., Ltd. (SHSE:605117) is about to go ex-dividend in just 2 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Ningbo Deye Technology Group's shares on or after the 29th of May, you won't be eligible to receive the dividend, when it is paid on the 29th of May.

The company's upcoming dividend is CN¥2.10 a share, following on from the last 12 months, when the company distributed a total of CN¥2.10 per share to shareholders. Last year's total dividend payments show that Ningbo Deye Technology Group has a trailing yield of 2.2% on the current share price of CN¥95.86. If you buy this business for its dividend, you should have an idea of whether Ningbo Deye Technology Group's dividend is reliable and sustainable. As a result, readers should always check whether Ningbo Deye Technology Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Ningbo Deye Technology Group

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. Ningbo Deye Technology Group paid out 55% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Ningbo Deye Technology Group generated enough free cash flow to afford its dividend. It paid out 80% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Ningbo Deye Technology Group'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Ningbo Deye Technology Group's earnings have been skyrocketing, up 64% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past two years, Ningbo Deye Technology Group has increased its dividend at approximately 110% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

From a dividend perspective, should investors buy or avoid Ningbo Deye Technology Group? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Ningbo Deye Technology Group's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 55% and 80% respectively. In summary, it's hard to get excited about Ningbo Deye Technology Group from a dividend perspective.

While it's tempting to invest in Ningbo Deye Technology Group for the dividends alone, you should always be mindful of the risks involved. For example, we've found 3 warning signs for Ningbo Deye Technology Group (1 is concerning!) that deserve your attention before investing in the 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.