Only Three Days Left To Cash In On CSD Water Service's (SHSE:603903) Dividend

CSD Water Service Co., Ltd. (SHSE:603903) stock is about to trade ex-dividend in three days. 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. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase CSD Water Service's shares before the 3rd of June in order to be eligible for the dividend, which will be paid on the 3rd of June.

The company's next dividend payment will be CN¥0.192 per share. Last year, in total, the company distributed CN¥0.19 to shareholders. Based on the last year's worth of payments, CSD Water Service has a trailing yield of 2.4% on the current stock price of CN¥8.02. 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! As a result, readers should always check whether CSD Water Service has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for CSD Water Service

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see CSD Water Service paying out a modest 27% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 102% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.

CSD Water Service paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to CSD Water Service's ability to maintain its dividend.

Click here to see how much of its profit CSD Water Service paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at CSD Water Service, with earnings per share up 8.6% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

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, seven years ago, CSD Water Service has lifted its dividend by approximately 33% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Has CSD Water Service got what it takes to maintain its dividend payments? CSD Water Service delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 102% of its cash flow over the last year, which is a mediocre outcome. Overall, it's hard to get excited about CSD Water Service from a dividend perspective.

If you want to look further into CSD Water Service, it's worth knowing the risks this business faces. To help with this, we've discovered 2 warning signs for CSD Water Service (1 is a bit unpleasant!) that you ought to be aware of before buying the shares.

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.