Why You Might Be Interested In Jinneng Holding Shanxi Coal Industry Co.,ltd. (SHSE:601001) For Its Upcoming Dividend

Readers hoping to buy Jinneng Holding Shanxi Coal Industry Co.,ltd. (SHSE:601001) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 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. Thus, you can purchase Jinneng Holding Shanxi Coal Industryltd's shares before the 27th of June in order to receive the dividend, which the company will pay on the 27th of June.

The company's next dividend payment will be CN¥0.79 per share, on the back of last year when the company paid a total of CN¥0.79 to shareholders. Last year's total dividend payments show that Jinneng Holding Shanxi Coal Industryltd has a trailing yield of 4.4% on the current share price of CN¥18.16. If you buy this business for its dividend, you should have an idea of whether Jinneng Holding Shanxi Coal Industryltd's dividend is reliable and sustainable. So we need to investigate whether Jinneng Holding Shanxi Coal Industryltd can afford its dividend, and if the dividend could grow.

View our latest analysis for Jinneng Holding Shanxi Coal Industryltd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Jinneng Holding Shanxi Coal Industryltd paying out a modest 39% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 80% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Jinneng Holding Shanxi Coal Industryltd'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?

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. That's why it's comforting to see Jinneng Holding Shanxi Coal Industryltd's earnings have been skyrocketing, up 39% per annum for the past 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, Jinneng Holding Shanxi Coal Industryltd has increased its dividend at approximately 52% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Should investors buy Jinneng Holding Shanxi Coal Industryltd for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Jinneng Holding Shanxi Coal Industryltd paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about Jinneng Holding Shanxi Coal Industryltd, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Jinneng Holding Shanxi Coal Industryltd is facing. Case in point: We've spotted 1 warning sign for Jinneng Holding Shanxi Coal Industryltd 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