Only Three Days Left To Cash In On Yunnan Botanee Bio-Technology GroupLTD's (SZSE:300957) Dividend

It looks like Yunnan Botanee Bio-Technology Group Co.LTD (SZSE:300957) is about to go ex-dividend in the next three days. 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Yunnan Botanee Bio-Technology GroupLTD's shares before the 11th of June in order to be eligible for the dividend, which will be paid on the 11th of June.

The company's next dividend payment will be CN¥0.600478 per share, and in the last 12 months, the company paid a total of CN¥0.60 per share. Looking at the last 12 months of distributions, Yunnan Botanee Bio-Technology GroupLTD has a trailing yield of approximately 1.1% on its current stock price of CN¥52.91. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Yunnan Botanee Bio-Technology GroupLTD

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 Yunnan Botanee Bio-Technology GroupLTD paying out a modest 33% of its earnings. 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. The company paid out 100% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.

While Yunnan Botanee Bio-Technology GroupLTD's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Yunnan Botanee Bio-Technology GroupLTD's ability to maintain its dividend.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Yunnan Botanee Bio-Technology GroupLTD, with earnings per share up 6.9% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Yunnan Botanee Bio-Technology GroupLTD has delivered an average of 10% per year annual increase in its dividend, based on the past three years of dividend payments. 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 Yunnan Botanee Bio-Technology GroupLTD for the upcoming dividend? Yunnan Botanee Bio-Technology GroupLTD has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. Overall, it's hard to get excited about Yunnan Botanee Bio-Technology GroupLTD from a dividend perspective.

If you're not too concerned about Yunnan Botanee Bio-Technology GroupLTD's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 2 warning signs with Yunnan Botanee Bio-Technology GroupLTD and understanding them should be part of your investment process.

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.