Interested In Jafron BiomedicalLtd's (SZSE:300529) Upcoming CN¥0.40 Dividend? You Have Three Days Left

It looks like Jafron Biomedical Co.,Ltd. (SZSE:300529) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Jafron BiomedicalLtd investors that purchase the stock on or after the 31st of May will not receive the dividend, which will be paid on the 31st of May.

The company's next dividend payment will be CN¥0.40 per share, and in the last 12 months, the company paid a total of CN¥0.40 per share. Calculating the last year's worth of payments shows that Jafron BiomedicalLtd has a trailing yield of 1.4% on the current share price of CN¥28.14. 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 check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Jafron BiomedicalLtd

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. Jafron BiomedicalLtd paid out 61% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year it paid out 64% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Jafron BiomedicalLtd'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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Jafron BiomedicalLtd earnings per share are up 5.8% per annum over the last five years. Decent historical earnings per share growth suggests Jafron BiomedicalLtd has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past seven years, Jafron BiomedicalLtd has increased its dividend at approximately 21% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is Jafron BiomedicalLtd an attractive dividend stock, or better left on the shelf? Earnings per share have been growing modestly and Jafron BiomedicalLtd paid out a bit over half of its earnings and free cash flow last year. To summarise, Jafron BiomedicalLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

However if you're still interested in Jafron BiomedicalLtd as a potential investment, you should definitely consider some of the risks involved with Jafron BiomedicalLtd. Case in point: We've spotted 1 warning sign for Jafron BiomedicalLtd you should be aware of.

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.