Qingdao Citymedia Co,. Ltd. (SHSE:600229) Will Pay A CN¥0.27 Dividend In Three Days

It looks like Qingdao Citymedia Co,. Ltd. (SHSE:600229) is about to go ex-dividend in the next three 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 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. Accordingly, Qingdao Citymedia Co investors that purchase the stock on or after the 18th of July will not receive the dividend, which will be paid on the 18th of July.

The company's next dividend payment will be CN¥0.27 per share. Last year, in total, the company distributed CN¥0.27 to shareholders. Last year's total dividend payments show that Qingdao Citymedia Co has a trailing yield of 4.1% on the current share price of CN¥6.66. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Qingdao Citymedia Co

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. Fortunately Qingdao Citymedia Co's payout ratio is modest, at just 45% of profit. A useful secondary check can be to evaluate whether Qingdao Citymedia Co generated enough free cash flow to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 Qingdao Citymedia Co paid out over the last 12 months.

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. This is why it's a relief to see Qingdao Citymedia Co earnings per share are up 4.0% per annum over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Qingdao Citymedia Co has delivered an average of 13% per year annual increase in its dividend, based on the past eight years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Should investors buy Qingdao Citymedia Co for the upcoming dividend? Earnings per share have been growing at a steady rate, and Qingdao Citymedia Co paid out less than half its profits and more than half its free cash flow as dividends over the last year. Overall, it's hard to get excited about Qingdao Citymedia Co from a dividend perspective.

On that note, you'll want to research what risks Qingdao Citymedia Co is facing. In terms of investment risks, we've identified 2 warning signs with Qingdao Citymedia Co and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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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