Dividend Investors: Don't Be Too Quick To Buy Zhejiang HangKe Technology Incorporated Company (SHSE:688006) For Its Upcoming Dividend

Zhejiang HangKe Technology Incorporated Company (SHSE:688006) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be two business days 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 important as the process of settlement involves at least 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 Zhejiang HangKe Technology's shares on or after the 17th of March, you won't be eligible to receive the dividend, when it is paid on the 17th of March.

The company's next dividend payment will be CN¥0.058 per share, on the back of last year when the company paid a total of CN¥0.45 to shareholders. Looking at the last 12 months of distributions, Zhejiang HangKe Technology has a trailing yield of approximately 2.2% on its current stock price of CN¥20.21. 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.

View our latest analysis for Zhejiang HangKe Technology

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. Zhejiang HangKe Technology is paying out an acceptable 58% of its profit, a common payout level among most companies.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that Zhejiang HangKe Technology's earnings are down 2.0% a year over 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 last five years, Zhejiang HangKe Technology has lifted its dividend by approximately 23% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

To Sum It Up

Is Zhejiang HangKe Technology worth buying for its dividend? We're not overly enthused to see Zhejiang HangKe Technology's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

So if you want to do more digging on Zhejiang HangKe Technology, you'll find it worthwhile knowing the risks that this stock faces. For example - Zhejiang HangKe Technology has 2 warning signs we think 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.

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

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.