XTC New Energy Materials(Xiamen) Co.,Ltd. (SHSE:688778) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see XTC New Energy Materials(Xiamen) Co.,Ltd. (SHSE:688778) is about to trade ex-dividend in the next two 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 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 XTC New Energy Materials(Xiamen)Ltd's shares before the 14th of June in order to receive the dividend, which the company will pay on the 14th of June.

The company's next dividend payment will be CN¥0.70 per share, on the back of last year when the company paid a total of CN¥0.70 to shareholders. Based on the last year's worth of payments, XTC New Energy Materials(Xiamen)Ltd stock has a trailing yield of around 2.0% on the current share price of CN¥34.38. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether XTC New Energy Materials(Xiamen)Ltd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for XTC New Energy Materials(Xiamen)Ltd

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. XTC New Energy Materials(Xiamen)Ltd paid out 56% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether XTC New Energy Materials(Xiamen)Ltd generated enough free cash flow to afford its dividend. The good news is it paid out just 17% of its free cash flow in the last year.

It's positive to see that XTC New Energy Materials(Xiamen)Ltd'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?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, XTC New Energy Materials(Xiamen)Ltd's earnings per share have been growing at 17% a year for the past five years. XTC New Energy Materials(Xiamen)Ltd is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, two years ago, XTC New Energy Materials(Xiamen)Ltd has lifted its dividend by approximately 40% 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

Has XTC New Energy Materials(Xiamen)Ltd got what it takes to maintain its dividend payments? We like XTC New Energy Materials(Xiamen)Ltd's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks XTC New Energy Materials(Xiamen)Ltd is facing. For example - XTC New Energy Materials(Xiamen)Ltd has 2 warning signs we think you should be aware of.

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.