Zanyu Technology Group Co., Ltd. (SZSE:002637) Goes Ex-Dividend Soon

It looks like Zanyu Technology Group Co., Ltd. (SZSE:002637) is about to go ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Zanyu Technology Group's shares before the 18th of June in order to be eligible for the dividend, which will be paid on the 18th 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. Based on the last year's worth of payments, Zanyu Technology Group stock has a trailing yield of around 1.1% on the current share price of CN¥8.93. If you buy this business for its dividend, you should have an idea of whether Zanyu Technology Group's dividend is reliable and sustainable. As a result, readers should always check whether Zanyu Technology Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Zanyu Technology Group

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. Zanyu Technology Group paid out a comfortable 38% of its profit last year. 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. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.

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 how much of its profit Zanyu Technology Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Zanyu Technology Group's 9.5% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Zanyu Technology Group has delivered 7.2% dividend growth per year on average over the past 10 years.

To Sum It Up

Should investors buy Zanyu Technology Group for the upcoming dividend? Earnings per share have fallen significantly, although at least Zanyu Technology Group paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. To summarise, Zanyu Technology Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Zanyu Technology Group, you'll find it worthwhile knowing the risks that this stock faces. Be aware that Zanyu Technology Group is showing 3 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

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.