Guizhou Taiyong-Changzheng Technology Co.,Ltd. (SZSE:002927) Stock Goes Ex-Dividend In Just Two Days

Guizhou Taiyong-Changzheng Technology Co.,Ltd. (SZSE:002927) stock is about to trade ex-dividend in two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. In other words, investors can purchase Guizhou Taiyong-Changzheng TechnologyLtd's shares before the 16th of October in order to be eligible for the dividend, which will be paid on the 16th of October.

The company's upcoming dividend is CN¥0.05 a share, following on from the last 12 months, when the company distributed a total of CN¥0.13 per share to shareholders. Looking at the last 12 months of distributions, Guizhou Taiyong-Changzheng TechnologyLtd has a trailing yield of approximately 0.9% on its current stock price of CN¥11.21. 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 Guizhou Taiyong-Changzheng TechnologyLtd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Guizhou Taiyong-Changzheng TechnologyLtd

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. Guizhou Taiyong-Changzheng TechnologyLtd paid out 72% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 37% of the free cash flow it generated, which is a comfortable payout ratio.

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 Guizhou Taiyong-Changzheng TechnologyLtd 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Guizhou Taiyong-Changzheng TechnologyLtd's earnings per share have fallen at approximately 6.0% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, six years ago, Guizhou Taiyong-Changzheng TechnologyLtd has lifted its dividend by approximately 4.2% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

To Sum It Up

Has Guizhou Taiyong-Changzheng TechnologyLtd got what it takes to maintain its dividend payments? 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. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

With that being said, if dividends aren't your biggest concern with Guizhou Taiyong-Changzheng TechnologyLtd, you should know about the other risks facing this business. Be aware that Guizhou Taiyong-Changzheng TechnologyLtd is showing 2 warning signs in our investment analysis, and 1 of those is concerning...

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.