Interested In Wuxi Double Elephant Micro Fibre MaterialLtd's (SZSE:002395) Upcoming CN¥0.10 Dividend? You Have Three Days Left

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 Wuxi Double Elephant Micro Fibre Material Co.,Ltd (SZSE:002395) is about to go ex-dividend in just three 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. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Wuxi Double Elephant Micro Fibre MaterialLtd's shares on or after the 5th of July, you won't be eligible to receive the dividend, when it is paid on the 5th of July.

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. Looking at the last 12 months of distributions, Wuxi Double Elephant Micro Fibre MaterialLtd has a trailing yield of approximately 0.7% on its current stock price of CN¥15.03. If you buy this business for its dividend, you should have an idea of whether Wuxi Double Elephant Micro Fibre MaterialLtd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Wuxi Double Elephant Micro Fibre MaterialLtd

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. Wuxi Double Elephant Micro Fibre MaterialLtd paid out a comfortable 40% of its profit last year. A useful secondary check can be to evaluate whether Wuxi Double Elephant Micro Fibre MaterialLtd generated enough free cash flow to afford its dividend.

Click here to see how much of its profit Wuxi Double Elephant Micro Fibre MaterialLtd paid out over the last 12 months.

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 Wuxi Double Elephant Micro Fibre MaterialLtd has grown its earnings rapidly, up 25% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Wuxi Double Elephant Micro Fibre MaterialLtd has delivered an average of 12% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Wuxi Double Elephant Micro Fibre MaterialLtd for the upcoming dividend? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. In summary, while it has some positive characteristics, we're not inclined to race out and buy Wuxi Double Elephant Micro Fibre MaterialLtd today.

In light of that, while Wuxi Double Elephant Micro Fibre MaterialLtd has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for Wuxi Double Elephant Micro Fibre MaterialLtd that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.

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