Only One Day Left To Cash In On Ningbo Ligong Environment And Energy TechnologyLtd's (SZSE:002322) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Ningbo Ligong Environment And Energy Technology Co.,Ltd (SZSE:002322) is about to trade ex-dividend in the next day or two. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Ningbo Ligong Environment And Energy TechnologyLtd's shares before the 23rd of May in order to receive the dividend, which the company will pay on the 23rd of May.

The company's upcoming dividend is CN¥0.85 a share, following on from the last 12 months, when the company distributed a total of CN¥0.85 per share to shareholders. Based on the last year's worth of payments, Ningbo Ligong Environment And Energy TechnologyLtd has a trailing yield of 5.9% on the current stock price of CN¥14.31. 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 Ningbo Ligong Environment And Energy TechnologyLtd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Ningbo Ligong Environment And Energy TechnologyLtd

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. Ningbo Ligong Environment And Energy TechnologyLtd distributed an unsustainably high 121% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. A useful secondary check can be to evaluate whether Ningbo Ligong Environment And Energy TechnologyLtd generated enough free cash flow to afford its dividend. It paid out 5.5% of its free cash flow as dividends last year, which is conservatively low.

It's good to see that while Ningbo Ligong Environment And Energy TechnologyLtd's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Click here to see how much of its profit Ningbo Ligong Environment And Energy TechnologyLtd paid out over the last 12 months.

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. This is why it's a relief to see Ningbo Ligong Environment And Energy TechnologyLtd earnings per share are up 2.4% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Ningbo Ligong Environment And Energy TechnologyLtd has lifted its dividend by approximately 24% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is Ningbo Ligong Environment And Energy TechnologyLtd an attractive dividend stock, or better left on the shelf? Ningbo Ligong Environment And Energy TechnologyLtd has been steadily growing its earnings per share, and it is paying out just 5.5% of its cash flow but an uncomfortably high 121% of its income. All things considered, we are not particularly enthused about Ningbo Ligong Environment And Energy TechnologyLtd from a dividend perspective.

However if you're still interested in Ningbo Ligong Environment And Energy TechnologyLtd as a potential investment, you should definitely consider some of the risks involved with Ningbo Ligong Environment And Energy TechnologyLtd. Be aware that Ningbo Ligong Environment And Energy TechnologyLtd is showing 2 warning signs in our investment analysis, and 1 of those can't be ignored...

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.