Should You Buy SPIC Industry-Finance Holdings Co., Ltd. (SZSE:000958) For Its Upcoming Dividend?

SPIC Industry-Finance Holdings Co., Ltd. (SZSE:000958) stock is about to trade ex-dividend in 3 days. 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. Accordingly, SPIC Industry-Finance Holdings investors that purchase the stock on or after the 27th of May will not receive the dividend, which will be paid on the 27th of May.

The company's next dividend payment will be CN¥0.063 per share, on the back of last year when the company paid a total of CN¥0.063 to shareholders. Looking at the last 12 months of distributions, SPIC Industry-Finance Holdings has a trailing yield of approximately 1.5% on its current stock price of CN¥4.09. 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 SPIC Industry-Finance Holdings can afford its dividend, and if the dividend could grow.

View our latest analysis for SPIC Industry-Finance Holdings

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. SPIC Industry-Finance Holdings paid out a comfortable 26% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit SPIC Industry-Finance Holdings 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at SPIC Industry-Finance Holdings, with earnings per share up 7.8% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past seven years, SPIC Industry-Finance Holdings has increased its dividend at approximately 3.4% 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

Should investors buy SPIC Industry-Finance Holdings for the upcoming dividend? SPIC Industry-Finance Holdings has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating SPIC Industry-Finance Holdings more closely.

While it's tempting to invest in SPIC Industry-Finance Holdings for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for SPIC Industry-Finance Holdings (1 is potentially serious!) that deserve your attention before investing in the shares.

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.