Income Investors Should Know That DeHua TB New Decoration Material Co.,Ltd (SZSE:002043) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that DeHua TB New Decoration Material Co.,Ltd (SZSE:002043) is about to go ex-dividend in just three days. 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. 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 DeHua TB New Decoration MaterialLtd's shares before the 30th of May in order to receive the dividend, which the company will pay on the 30th of May.

The company's next dividend payment will be CN¥0.55 per share, and in the last 12 months, the company paid a total of CN¥0.55 per share. Calculating the last year's worth of payments shows that DeHua TB New Decoration MaterialLtd has a trailing yield of 4.6% on the current share price of CN¥11.85. 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 DeHua TB New Decoration MaterialLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for DeHua TB New Decoration MaterialLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. DeHua TB New Decoration MaterialLtd paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether DeHua TB New Decoration MaterialLtd generated enough free cash flow to afford its dividend. Over the last year it paid out 53% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that DeHua TB New Decoration MaterialLtd'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?

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. For this reason, we're glad to see DeHua TB New Decoration MaterialLtd's earnings per share have risen 16% per annum over the last five years. DeHua TB New Decoration MaterialLtd is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. DeHua TB New Decoration MaterialLtd has delivered 39% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

From a dividend perspective, should investors buy or avoid DeHua TB New Decoration MaterialLtd? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see DeHua TB New Decoration MaterialLtd's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 63% and 53% respectively. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

So while DeHua TB New Decoration MaterialLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for DeHua TB New Decoration MaterialLtd and you should be aware of it before buying any 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.