Three Days Left To Buy Suzhou Kingswood Education Technology Co., Ltd. (SZSE:300192) Before The Ex-Dividend Date

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 Suzhou Kingswood Education Technology Co., Ltd. (SZSE:300192) 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Suzhou Kingswood Education Technology's shares before the 11th of October in order to receive the dividend, which the company will pay on the 11th of October.

The company's upcoming dividend is CN¥0.15 a share, following on from the last 12 months, when the company distributed a total of CN¥0.27 per share to shareholders. Calculating the last year's worth of payments shows that Suzhou Kingswood Education Technology has a trailing yield of 2.2% on the current share price of CN¥13.64. If you buy this business for its dividend, you should have an idea of whether Suzhou Kingswood Education Technology's dividend is reliable and sustainable. So we need to investigate whether Suzhou Kingswood Education Technology can afford its dividend, and if the dividend could grow.

View our latest analysis for Suzhou Kingswood Education Technology

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. Last year, Suzhou Kingswood Education Technology paid out 96% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business. 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 45% of the free cash flow it generated, which is a comfortable payout ratio.

It's good to see that while Suzhou Kingswood Education Technology's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Suzhou Kingswood Education Technology 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 Suzhou Kingswood Education Technology has grown its earnings rapidly, up 29% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Suzhou Kingswood Education Technology has delivered an average of 29% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Should investors buy Suzhou Kingswood Education Technology for the upcoming dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Suzhou Kingswood Education Technology is paying out so much of its profit. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For instance, we've identified 2 warning signs for Suzhou Kingswood Education Technology (1 doesn't sit too well with us) 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.