New China Life Insurance Company Ltd. (SHSE:601336) Passed Our Checks, And It's About To Pay A CN¥0.54 Dividend

New China Life Insurance Company Ltd. (SHSE:601336) stock is about to trade ex-dividend in three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Meaning, you will need to purchase New China Life Insurance's shares before the 29th of November to receive the dividend, which will be paid on the 29th of November.

The company's next dividend payment will be CN¥0.54 per share. Last year, in total, the company distributed CN¥1.08 to shareholders. Calculating the last year's worth of payments shows that New China Life Insurance has a trailing yield of 2.3% on the current share price of CN¥46.31. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for New China Life Insurance

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. New China Life Insurance is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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

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. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see New China Life Insurance has grown its earnings rapidly, up 20% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. New China Life Insurance has delivered 22% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is New China Life Insurance an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, New China Life Insurance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in New China Life Insurance for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for New China Life Insurance (1 shouldn't be ignored!) that you ought to be aware of before buying 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.