Mega-info Media Co.,Ltd. (SZSE:301102) Stock Goes Ex-Dividend In Just Three Days

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 Mega-info Media Co.,Ltd. (SZSE:301102) is about to go ex-dividend in just 3 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Mega-info MediaLtd's shares on or after the 19th of July, you won't be eligible to receive the dividend, when it is paid on the 19th of July.

The company's next dividend payment will be CN¥0.14 per share, on the back of last year when the company paid a total of CN¥0.14 to shareholders. Based on the last year's worth of payments, Mega-info MediaLtd has a trailing yield of 1.2% on the current stock price of CN¥11.45. If you buy this business for its dividend, you should have an idea of whether Mega-info MediaLtd's dividend is reliable and sustainable. As a result, readers should always check whether Mega-info MediaLtd has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Mega-info MediaLtd

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. That's why it's good to see Mega-info MediaLtd paying out a modest 37% of its earnings. A useful secondary check can be to evaluate whether Mega-info MediaLtd generated enough free cash flow to afford its dividend. It paid out 9.4% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Mega-info MediaLtd'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?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Mega-info MediaLtd's earnings per share have fallen at approximately 12% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mega-info MediaLtd has seen its dividend decline 9.9% per annum on average over the past two years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

From a dividend perspective, should investors buy or avoid Mega-info MediaLtd? Mega-info MediaLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, Mega-info MediaLtd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 2 warning signs with Mega-info MediaLtd and understanding them should be part of your investment process.

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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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