Zhejiang Changsheng Sliding Bearings Co., Ltd. (SZSE:300718) Is About To Go Ex-Dividend, And It Pays A 3.0% Yield

Readers hoping to buy Zhejiang Changsheng Sliding Bearings Co., Ltd. (SZSE:300718) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 Zhejiang Changsheng Sliding Bearings' shares before the 17th of October in order to receive the dividend, which the company will pay on the 17th of October.

The company's next dividend payment will be CN¥0.168 per share, on the back of last year when the company paid a total of CN¥0.47 to shareholders. Looking at the last 12 months of distributions, Zhejiang Changsheng Sliding Bearings has a trailing yield of approximately 3.0% on its current stock price of CN¥15.86. If you buy this business for its dividend, you should have an idea of whether Zhejiang Changsheng Sliding Bearings's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Zhejiang Changsheng Sliding Bearings

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. Zhejiang Changsheng Sliding Bearings paid out 50% 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. Over the last year it paid out 56% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Zhejiang Changsheng Sliding Bearings'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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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, Zhejiang Changsheng Sliding Bearings's earnings per share have been growing at 10% a year for the past five years. Zhejiang Changsheng Sliding Bearings 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past six years, Zhejiang Changsheng Sliding Bearings has increased its dividend at approximately 25% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Has Zhejiang Changsheng Sliding Bearings got what it takes to maintain its dividend payments? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. However, we'd also note that Zhejiang Changsheng Sliding Bearings is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. To summarise, Zhejiang Changsheng Sliding Bearings looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Zhejiang Changsheng Sliding Bearings is facing. Be aware that Zhejiang Changsheng Sliding Bearings is showing 2 warning signs in our investment analysis, and 1 of those is potentially serious...

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.