Should You Buy Shandong Nanshan Aluminium Co.,Ltd. (SHSE:600219) For Its Upcoming Dividend?

Shandong Nanshan Aluminium Co.,Ltd. (SHSE:600219) stock is about to trade ex-dividend in 3 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. 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. Thus, you can purchase Shandong Nanshan AluminiumLtd's shares before the 11th of October in order to receive the dividend, which the company will pay on the 11th of October.

The company's next dividend payment will be CN¥0.04 per share, and in the last 12 months, the company paid a total of CN¥0.08 per share. Looking at the last 12 months of distributions, Shandong Nanshan AluminiumLtd has a trailing yield of approximately 1.8% on its current stock price of CN¥4.38. If you buy this business for its dividend, you should have an idea of whether Shandong Nanshan AluminiumLtd's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Shandong Nanshan AluminiumLtd

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. Shandong Nanshan AluminiumLtd paid out a comfortable 42% of its profit last year. A useful secondary check can be to evaluate whether Shandong Nanshan AluminiumLtd generated enough free cash flow to afford its dividend. Dividends consumed 58% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Shandong Nanshan AluminiumLtd'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. Fortunately for readers, Shandong Nanshan AluminiumLtd's earnings per share have been growing at 20% a year for the past five years. Shandong Nanshan AluminiumLtd is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. 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. In the last 10 years, Shandong Nanshan AluminiumLtd has lifted its dividend by approximately 2.9% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Should investors buy Shandong Nanshan AluminiumLtd for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Shandong Nanshan AluminiumLtd paid out less than half its earnings and a bit over half its free cash flow. Shandong Nanshan AluminiumLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 2 warning signs for Shandong Nanshan AluminiumLtd and you should be aware of them before buying any shares.

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.