Only Four Days Left To Cash In On Inner Mongolia Yili Industrial Group's (SHSE:600887) Dividend

Inner Mongolia Yili Industrial Group Co., Ltd. (SHSE:600887) is about to trade ex-dividend in the next four 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. Thus, you can purchase Inner Mongolia Yili Industrial Group's shares before the 5th of June in order to receive the dividend, which the company will pay on the 5th of June.

The company's next dividend payment will be CN¥1.20 per share. Last year, in total, the company distributed CN¥1.20 to shareholders. Looking at the last 12 months of distributions, Inner Mongolia Yili Industrial Group has a trailing yield of approximately 4.2% on its current stock price of CN¥28.31. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Inner Mongolia Yili Industrial Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Inner Mongolia Yili Industrial 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. Inner Mongolia Yili Industrial Group is paying out an acceptable 60% of its profit, a common payout level among most companies. 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. Over the last year it paid out 66% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Inner Mongolia Yili Industrial 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?

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Inner Mongolia Yili Industrial Group's earnings per share have been growing at 14% a year for the past five years. Inner Mongolia Yili Industrial Group has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Inner Mongolia Yili Industrial Group has delivered 16% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

From a dividend perspective, should investors buy or avoid Inner Mongolia Yili Industrial Group? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Inner Mongolia Yili Industrial Group's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 60% and 66% respectively. In summary, it's hard to get excited about Inner Mongolia Yili Industrial Group from a dividend perspective.

Wondering what the future holds for Inner Mongolia Yili Industrial Group? See what the 28 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.