Interested In Xi'an Manareco New MaterialsLtd's (SHSE:688550) Upcoming CN¥0.45 Dividend? You Have Two Days Left

Xi'an Manareco New Materials Co.,Ltd (SHSE:688550) stock is about to trade ex-dividend in two 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. This means that investors who purchase Xi'an Manareco New MaterialsLtd's shares on or after the 14th of June will not receive the dividend, which will be paid on the 14th of June.

The company's next dividend payment will be CN¥0.45 per share, and in the last 12 months, the company paid a total of CN¥0.45 per share. Based on the last year's worth of payments, Xi'an Manareco New MaterialsLtd stock has a trailing yield of around 1.3% on the current share price of CN¥33.39. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Xi'an Manareco New MaterialsLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Xi'an Manareco New MaterialsLtd

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 Xi'an Manareco New MaterialsLtd paying out a modest 40% of its earnings. A useful secondary check can be to evaluate whether Xi'an Manareco New MaterialsLtd generated enough free cash flow to afford its dividend. It paid out more than half (66%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Xi'an Manareco New MaterialsLtd'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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 Xi'an Manareco New MaterialsLtd, with earnings per share up 4.8% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Xi'an Manareco New MaterialsLtd's dividend payments per share have declined at 8.2% per year on average over the past three years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

From a dividend perspective, should investors buy or avoid Xi'an Manareco New MaterialsLtd? Earnings per share growth has been modest, and it's interesting that Xi'an Manareco New MaterialsLtd is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. In summary, while it has some positive characteristics, we're not inclined to race out and buy Xi'an Manareco New MaterialsLtd today.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Xi'an Manareco New MaterialsLtd has 1 warning sign we think you should be aware of.

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.