Shandong Xinjufeng Technology Packaging Co., Ltd. (SZSE:301296) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Shandong Xinjufeng Technology Packaging Co., Ltd. (SZSE:301296) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Thus, you can purchase Shandong Xinjufeng Technology Packaging's shares before the 4th of July in order to receive the dividend, which the company will pay on the 4th of July.

The company's next dividend payment will be CN¥0.053426 per share. Last year, in total, the company distributed CN¥0.053 to shareholders. Looking at the last 12 months of distributions, Shandong Xinjufeng Technology Packaging has a trailing yield of approximately 0.7% on its current stock price of CN¥7.21. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Shandong Xinjufeng Technology Packaging has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Shandong Xinjufeng Technology Packaging

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. Shandong Xinjufeng Technology Packaging is paying out just 12% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Shandong Xinjufeng Technology Packaging generated enough free cash flow to afford its dividend. It paid out 0.4% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Shandong Xinjufeng Technology Packaging's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Shandong Xinjufeng Technology Packaging's earnings per share have risen 12% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Unfortunately Shandong Xinjufeng Technology Packaging has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Shandong Xinjufeng Technology Packaging an attractive dividend stock, or better left on the shelf? Shandong Xinjufeng Technology Packaging has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks Shandong Xinjufeng Technology Packaging is facing. Case in point: We've spotted 1 warning sign for Shandong Xinjufeng Technology Packaging 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.

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