Here's What We Like About Easy Click Worldwide Network Technology's (SZSE:301171) Upcoming Dividend

Readers hoping to buy Easy Click Worldwide Network Technology Co., Ltd. (SZSE:301171) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Easy Click Worldwide Network Technology's shares before the 21st of November in order to receive the dividend, which the company will pay on the 21st of November.

The company's upcoming dividend is CN¥0.025 a share, following on from the last 12 months, when the company distributed a total of CN¥0.11 per share to shareholders. Based on the last year's worth of payments, Easy Click Worldwide Network Technology has a trailing yield of 0.4% on the current stock price of CN¥30.73. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Easy Click Worldwide Network Technology

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. Easy Click Worldwide Network Technology has a low and conservative payout ratio of just 22% of its income after tax. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 15% of its free cash flow last year.

It's positive to see that Easy Click Worldwide Network Technology'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 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Easy Click Worldwide Network Technology's earnings per share have remained 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. Easy Click Worldwide Network Technology is retaining more than three-quarters of its earnings and has a history of generating some growth in earnings. We think this is a reasonable combination.

Unfortunately Easy Click Worldwide Network Technology has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is Easy Click Worldwide Network Technology worth buying for its dividend? Earnings per share have been flat over this time, but we're intrigued to see that Easy Click Worldwide Network Technology is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. Generally we like to see both low payout ratios and strong earnings per share growth, but Easy Click Worldwide Network Technology is halfway there. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Easy Click Worldwide Network Technology for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Easy Click Worldwide Network Technology (including 1 which is significant).

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.