Three Days Left To Buy Huangshan Tourism Development Co.,Ltd. (SHSE:600054) Before The Ex-Dividend Date

Huangshan Tourism Development Co.,Ltd. (SHSE:600054) is about to trade ex-dividend in the next three 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. 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. Therefore, if you purchase Huangshan Tourism DevelopmentLtd's shares on or after the 27th of June, you won't be eligible to receive the dividend, when it is paid on the 27th of June.

The company's next dividend payment will be CN¥0.209 per share. Last year, in total, the company distributed CN¥0.21 to shareholders. Calculating the last year's worth of payments shows that Huangshan Tourism DevelopmentLtd has a trailing yield of 1.8% on the current share price of CN¥11.54. If you buy this business for its dividend, you should have an idea of whether Huangshan Tourism DevelopmentLtd's dividend is reliable and sustainable. As a result, readers should always check whether Huangshan Tourism DevelopmentLtd has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Huangshan Tourism DevelopmentLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Huangshan Tourism DevelopmentLtd's payout ratio is modest, at just 40% of profit. 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. Luckily it paid out just 2.0% of its free cash flow last year.

It's positive to see that Huangshan Tourism DevelopmentLtd'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?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Huangshan Tourism DevelopmentLtd's earnings per share have dropped 7.6% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Huangshan Tourism DevelopmentLtd has delivered an average of 27% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Is Huangshan Tourism DevelopmentLtd worth buying for its dividend? Huangshan Tourism DevelopmentLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, while it has some positive characteristics, we're not inclined to race out and buy Huangshan Tourism DevelopmentLtd today.

So while Huangshan Tourism DevelopmentLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Huangshan Tourism DevelopmentLtd has 1 warning sign we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com