Der Future Science and Technology Holding Group Co., Ltd. (SZSE:002631) Goes Ex-Dividend Soon

Readers hoping to buy Der Future Science and Technology Holding Group Co., Ltd. (SZSE:002631) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Therefore, if you purchase Der Future Science and Technology Holding Group's shares on or after the 28th of May, you won't be eligible to receive the dividend, when it is paid on the 28th of May.

The company's next dividend payment will be CN¥0.03 per share, on the back of last year when the company paid a total of CN¥0.03 to shareholders. Looking at the last 12 months of distributions, Der Future Science and Technology Holding Group has a trailing yield of approximately 0.6% on its current stock price of CN¥4.80. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Der Future Science and Technology Holding 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. Der Future Science and Technology Holding Group paid out more than half (73%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether Der Future Science and Technology Holding Group generated enough free cash flow to afford its dividend. Luckily it paid out just 23% of its free cash flow last year.

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 Der Future Science and Technology Holding Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Der Future Science and Technology Holding Group's earnings per share have fallen at approximately 24% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

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, Der Future Science and Technology Holding Group has lifted its dividend by approximately 1.8% a year on average.

Final Takeaway

Is Der Future Science and Technology Holding Group an attractive dividend stock, or better left on the shelf? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. In summary, while it has some positive characteristics, we're not inclined to race out and buy Der Future Science and Technology Holding Group today.

However if you're still interested in Der Future Science and Technology Holding Group as a potential investment, you should definitely consider some of the risks involved with Der Future Science and Technology Holding Group. For instance, we've identified 2 warning signs for Der Future Science and Technology Holding Group (1 makes us a bit uncomfortable) 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.

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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.