Income Investors Should Know That Dare Power Dekor Home Co.,Ltd. (SZSE:000910) Goes Ex-Dividend Soon

Dare Power Dekor Home Co.,Ltd. (SZSE:000910) is about to trade ex-dividend in the next four 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. This means that investors who purchase Dare Power Dekor HomeLtd's shares on or after the 15th of May will not receive the dividend, which will be paid on the 15th of May.

The company's next dividend payment will be CN¥0.19 per share, on the back of last year when the company paid a total of CN¥0.19 to shareholders. Calculating the last year's worth of payments shows that Dare Power Dekor HomeLtd has a trailing yield of 2.7% on the current share price of CN¥7.13. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Dare Power Dekor HomeLtd

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. Dare Power Dekor HomeLtd paid out a comfortable 30% of its profit last year. A useful secondary check can be to evaluate whether Dare Power Dekor HomeLtd generated enough free cash flow to afford its dividend. It distributed 28% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Dare Power Dekor HomeLtd paid out over the last 12 months.

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. With that in mind, we're discomforted by Dare Power Dekor HomeLtd's 14% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

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, 10 years ago, Dare Power Dekor HomeLtd has lifted its dividend by approximately 17% a year on average.

Final Takeaway

Is Dare Power Dekor HomeLtd worth buying for its dividend? Dare Power Dekor HomeLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, Dare Power Dekor HomeLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Dare Power Dekor HomeLtd is facing. To help with this, we've discovered 1 warning sign for Dare Power Dekor HomeLtd that you should be aware of before investing in their shares.

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.

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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.