Xinhuanet Co., Ltd. (SHSE:603888) Will Pay A CN¥0.211 Dividend In Three Days

Xinhuanet Co., Ltd. (SHSE:603888) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. Accordingly, Xinhuanet investors that purchase the stock on or after the 26th of July will not receive the dividend, which will be paid on the 26th of July.

The company's next dividend payment will be CN¥0.211 per share, and in the last 12 months, the company paid a total of CN¥0.21 per share. Looking at the last 12 months of distributions, Xinhuanet has a trailing yield of approximately 1.0% on its current stock price of CN¥21.12. If you buy this business for its dividend, you should have an idea of whether Xinhuanet's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Xinhuanet

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. Xinhuanet paid out a comfortable 40% of its profit last year. A useful secondary check can be to evaluate whether Xinhuanet generated enough free cash flow to afford its dividend. The good news is it paid out just 24% of its free cash flow in the last year.

It's positive to see that Xinhuanet'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 how much of its profit Xinhuanet paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Xinhuanet's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Xinhuanet's dividend payments per share have declined at 14% per year on average over the past eight years, which is uninspiring.

Final Takeaway

Is Xinhuanet an attractive dividend stock, or better left on the shelf? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. 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.

On that note, you'll want to research what risks Xinhuanet is facing. To help with this, we've discovered 1 warning sign for Xinhuanet that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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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