Just Three Days Till BTG Hotels (Group) Co., Ltd. (SHSE:600258) Will Be Trading Ex-Dividend

Readers hoping to buy BTG Hotels (Group) Co., Ltd. (SHSE:600258) 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. 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. Meaning, you will need to purchase BTG Hotels (Group)'s shares before the 28th of June to receive the dividend, which will be paid on the 28th of June.

The company's upcoming dividend is CN¥0.22 a share, following on from the last 12 months, when the company distributed a total of CN¥0.22 per share to shareholders. Last year's total dividend payments show that BTG Hotels (Group) has a trailing yield of 1.7% on the current share price of CN¥13.28. 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! So we need to investigate whether BTG Hotels (Group) can afford its dividend, and if the dividend could grow.

View our latest analysis for BTG Hotels (Group)

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see BTG Hotels (Group) paying out a modest 29% of its earnings. A useful secondary check can be to evaluate whether BTG Hotels (Group) generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 13% of its cash flow last year.

It's positive to see that BTG Hotels (Group)'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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see BTG Hotels (Group)'s earnings per share have been shrinking at 3.1% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, BTG Hotels (Group) has increased its dividend at approximately 2.4% a year on average.

To Sum It Up

From a dividend perspective, should investors buy or avoid BTG Hotels (Group)? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of BTG Hotels (Group)'s dividend merits.

While it's tempting to invest in BTG Hotels (Group) for the dividends alone, you should always be mindful of the risks involved. For example - BTG Hotels (Group) has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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