Three Days Left Until Anhui Annada Titanium Industry Co., Ltd. (SZSE:002136) Trades Ex-Dividend

It looks like Anhui Annada Titanium Industry Co., Ltd. (SZSE:002136) is about to go ex-dividend in the next 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Anhui Annada Titanium Industry's shares before the 14th of June in order to be eligible for the dividend, which will be paid on the 14th of June.

The company's upcoming dividend is CN¥0.10 a share, following on from the last 12 months, when the company distributed a total of CN¥0.10 per share to shareholders. Last year's total dividend payments show that Anhui Annada Titanium Industry has a trailing yield of 1.0% on the current share price of CN¥9.69. If you buy this business for its dividend, you should have an idea of whether Anhui Annada Titanium Industry's dividend is reliable and sustainable. So we need to investigate whether Anhui Annada Titanium Industry can afford its dividend, and if the dividend could grow.

View our latest analysis for Anhui Annada Titanium Industry

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. Fortunately Anhui Annada Titanium Industry's payout ratio is modest, at just 41% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (77%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Anhui Annada Titanium Industry'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 how much of its profit Anhui Annada Titanium Industry paid out over the last 12 months.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Anhui Annada Titanium Industry, with earnings per share up 2.6% on average over the last five years. A high payout ratio of 41% generally happens when a company can't find better uses for the cash. Combined with slim earnings growth in the past few years, Anhui Annada Titanium Industry could be signalling that its future growth prospects are thin.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Anhui Annada Titanium Industry's dividend payments are broadly unchanged compared to where they were six years ago.

The Bottom Line

Should investors buy Anhui Annada Titanium Industry for the upcoming dividend? Earnings per share growth has been modest, and it's interesting that Anhui Annada Titanium Industry is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Anhui Annada Titanium Industry's dividend merits.

On that note, you'll want to research what risks Anhui Annada Titanium Industry is facing. To help with this, we've discovered 3 warning signs for Anhui Annada Titanium Industry that you should be aware of before investing in their 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.