Dongguan Golden Sun Abrasives Co.,Ltd (SZSE:300606) Goes Ex-Dividend Soon

Dongguan Golden Sun Abrasives Co.,Ltd (SZSE:300606) stock is about to trade ex-dividend in 2 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. Meaning, you will need to purchase Dongguan Golden Sun AbrasivesLtd's shares before the 20th of June to receive the dividend, which will be paid on the 20th of June.

The company's next dividend payment will be CN¥0.15 per share, and in the last 12 months, the company paid a total of CN¥0.15 per share. Calculating the last year's worth of payments shows that Dongguan Golden Sun AbrasivesLtd has a trailing yield of 0.9% on the current share price of CN¥17.47. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Dongguan Golden Sun AbrasivesLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Dongguan Golden Sun AbrasivesLtd paid out a comfortable 36% 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. Dongguan Golden Sun AbrasivesLtd paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit Dongguan Golden Sun AbrasivesLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Dongguan Golden Sun AbrasivesLtd's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, five years ago, Dongguan Golden Sun AbrasivesLtd has lifted its dividend by approximately 35% a year on average.

To Sum It Up

From a dividend perspective, should investors buy or avoid Dongguan Golden Sun AbrasivesLtd? Earnings per share have been effectively flat over this time, and Dongguan Golden Sun AbrasivesLtd's paying out less than half its profits and -3.6% of its cash flow. It's not common to see a company paying out a limited amount of its profits yet a substantially higher percentage of its cash flow, so we'd flag this as a concern. To summarise, Dongguan Golden Sun AbrasivesLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Dongguan Golden Sun AbrasivesLtd, you'll find it worthwhile knowing the risks that this stock faces. For example, Dongguan Golden Sun AbrasivesLtd has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com