Be Sure To Check Out Zhejiang JIULI Hi-tech Metals Co.,Ltd (SZSE:002318) Before It Goes Ex-Dividend

Readers hoping to buy Zhejiang JIULI Hi-tech Metals Co.,Ltd (SZSE:002318) 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. 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. Accordingly, Zhejiang JIULI Hi-tech MetalsLtd investors that purchase the stock on or after the 30th of May will not receive the dividend, which will be paid on the 30th of May.

The company's next dividend payment will be CN¥0.48 per share, on the back of last year when the company paid a total of CN¥0.48 to shareholders. Looking at the last 12 months of distributions, Zhejiang JIULI Hi-tech MetalsLtd has a trailing yield of approximately 2.0% on its current stock price of CN¥24.14. If you buy this business for its dividend, you should have an idea of whether Zhejiang JIULI Hi-tech MetalsLtd'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.

Check out our latest analysis for Zhejiang JIULI Hi-tech MetalsLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Zhejiang JIULI Hi-tech MetalsLtd's payout ratio is modest, at just 29% 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. Thankfully its dividend payments took up just 31% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Zhejiang JIULI Hi-tech MetalsLtd has grown its earnings rapidly, up 36% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Zhejiang JIULI Hi-tech MetalsLtd has delivered an average of 20% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

From a dividend perspective, should investors buy or avoid Zhejiang JIULI Hi-tech MetalsLtd? It's great that Zhejiang JIULI Hi-tech MetalsLtd is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about Zhejiang JIULI Hi-tech MetalsLtd, and we would prioritise taking a closer look at it.

While it's tempting to invest in Zhejiang JIULI Hi-tech MetalsLtd for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Zhejiang JIULI Hi-tech MetalsLtd 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.