Jiajiayue Group Co., Ltd. (SHSE:603708) Will Pay A CN¥0.19 Dividend In Four Days

Readers hoping to buy Jiajiayue Group Co., Ltd. (SHSE:603708) 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 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. Thus, you can purchase Jiajiayue Group's shares before the 24th of June in order to receive the dividend, which the company will pay on the 24th of June.

The company's next dividend payment will be CN¥0.19 per share, on the back of last year when the company paid a total of CN¥0.19 to shareholders. Last year's total dividend payments show that Jiajiayue Group has a trailing yield of 2.2% on the current share price of CN¥8.64. If you buy this business for its dividend, you should have an idea of whether Jiajiayue Group's dividend is reliable and sustainable. As a result, readers should always check whether Jiajiayue Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Jiajiayue Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 82% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline. 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. The good news is it paid out just 6.6% of its free cash flow in the 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Jiajiayue Group's 20% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Jiajiayue Group's dividend payments per share have declined at 4.7% per year on average over the past seven years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

To Sum It Up

Is Jiajiayue Group worth buying for its dividend? 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. All things considered, we are not particularly enthused about Jiajiayue Group from a dividend perspective.

So if you want to do more digging on Jiajiayue Group, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for Jiajiayue Group you should be aware of.

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.

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