Qingdao Yunlu Advanced Materials Technology Co., Ltd. (SHSE:688190) Goes Ex-Dividend Soon

Readers hoping to buy Qingdao Yunlu Advanced Materials Technology Co., Ltd. (SHSE:688190) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Qingdao Yunlu Advanced Materials Technology's shares on or after the 6th of June, you won't be eligible to receive the dividend, when it is paid on the 6th of June.

The company's next dividend payment will be CN¥0.85 per share, and in the last 12 months, the company paid a total of CN¥0.85 per share. Based on the last year's worth of payments, Qingdao Yunlu Advanced Materials Technology has a trailing yield of 1.1% on the current stock price of CN¥80.71. If you buy this business for its dividend, you should have an idea of whether Qingdao Yunlu Advanced Materials Technology's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Qingdao Yunlu Advanced Materials Technology

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. Qingdao Yunlu Advanced Materials Technology paid out a comfortable 30% of its profit last year. 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. It paid out 102% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

Qingdao Yunlu Advanced Materials Technology paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were Qingdao Yunlu Advanced Materials Technology to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

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. That's why it's comforting to see Qingdao Yunlu Advanced Materials Technology's earnings have been skyrocketing, up 21% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Qingdao Yunlu Advanced Materials Technology has delivered 60% dividend growth per year on average over the past two 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

Is Qingdao Yunlu Advanced Materials Technology an attractive dividend stock, or better left on the shelf? We like that Qingdao Yunlu Advanced Materials Technology has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. To summarise, Qingdao Yunlu Advanced Materials Technology looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Qingdao Yunlu Advanced Materials Technology is facing. For example, we've found 1 warning sign for Qingdao Yunlu Advanced Materials Technology that we recommend you consider before investing in the business.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.