Only One Day Left To Cash In On Shenwan Hongyuan Group's (SZSE:000166) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Shenwan Hongyuan Group Co., Ltd. (SZSE:000166) is about to trade ex-dividend in the next day or two. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Shenwan Hongyuan Group's shares on or after the 20th of August will not receive the dividend, which will be paid on the 20th of August.

The company's next dividend payment will be CN¥0.056 per share, on the back of last year when the company paid a total of CN¥0.056 to shareholders. Looking at the last 12 months of distributions, Shenwan Hongyuan Group has a trailing yield of approximately 1.2% on its current stock price of CN¥4.62. If you buy this business for its dividend, you should have an idea of whether Shenwan Hongyuan Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Shenwan Hongyuan Group

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Shenwan Hongyuan Group paid out a comfortable 34% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Shenwan Hongyuan Group's earnings are down 3.1% a year over the past five years.

Shenwan Hongyuan Group also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Shenwan Hongyuan Group has seen its dividend decline 7.9% per annum on average over the past seven years, which is not great to see. 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.

The Bottom Line

Should investors buy Shenwan Hongyuan Group for the upcoming dividend? Shenwan Hongyuan Group's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you want to look further into Shenwan Hongyuan Group, it's worth knowing the risks this business faces. Case in point: We've spotted 1 warning sign for Shenwan Hongyuan 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.

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

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.