Two Days Left To Buy JiangXi BaiSheng Intelligent Technology Co., Ltd. (SZSE:301083) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see JiangXi BaiSheng Intelligent Technology Co., Ltd. (SZSE:301083) is about to trade ex-dividend in the next 2 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Accordingly, JiangXi BaiSheng Intelligent Technology investors that purchase the stock on or after the 3rd of June will not receive the dividend, which will be paid on the 3rd of June.

The company's next dividend payment will be CN¥0.12 per share. Last year, in total, the company distributed CN¥0.12 to shareholders. Last year's total dividend payments show that JiangXi BaiSheng Intelligent Technology has a trailing yield of 0.8% on the current share price of CN¥14.17. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether JiangXi BaiSheng Intelligent Technology has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for JiangXi BaiSheng Intelligent Technology

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. JiangXi BaiSheng Intelligent Technology paid out more than half (54%) of its earnings last year, which is a regular payout ratio for most companies. 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. Fortunately, it paid out only 31% of its free cash flow in the past 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 JiangXi BaiSheng Intelligent Technology 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. With that in mind, we're discomforted by JiangXi BaiSheng Intelligent Technology's 9.8% 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. JiangXi BaiSheng Intelligent Technology has delivered an average of 85% per year annual increase in its dividend, based on the past two years of dividend payments. 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.

Final Takeaway

Is JiangXi BaiSheng Intelligent Technology 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. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of JiangXi BaiSheng Intelligent Technology's dividend merits.

With that being said, if dividends aren't your biggest concern with JiangXi BaiSheng Intelligent Technology, you should know about the other risks facing this business. Be aware that JiangXi BaiSheng Intelligent Technology is showing 3 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.