Nanhua Futures Co., Ltd. (SHSE:603093) Passed Our Checks, And It's About To Pay A CN¥0.066 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Nanhua Futures Co., Ltd. (SHSE:603093) is about to go ex-dividend in just four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Nanhua Futures' shares before the 28th of May to receive the dividend, which will be paid on the 28th of May.

The company's next dividend payment will be CN¥0.066 per share, on the back of last year when the company paid a total of CN¥0.066 to shareholders. Looking at the last 12 months of distributions, Nanhua Futures has a trailing yield of approximately 0.6% on its current stock price of CN¥10.42. If you buy this business for its dividend, you should have an idea of whether Nanhua Futures's dividend is reliable and sustainable. So we need to investigate whether Nanhua Futures can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Nanhua Futures

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Nanhua Futures is paying out just 9.4% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Nanhua Futures paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Nanhua Futures has grown its earnings rapidly, up 24% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last four years, Nanhua Futures has lifted its dividend by approximately 8.3% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Has Nanhua Futures got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Nanhua Futures looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious about whether Nanhua Futures has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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.