ZhuZhou QianJin Pharmaceutical Co.,Ltd (SHSE:600479) Passed Our Checks, And It's About To Pay A CN¥0.35 Dividend

ZhuZhou QianJin Pharmaceutical Co.,Ltd (SHSE:600479) stock is about to trade ex-dividend in 2 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. In other words, investors can purchase ZhuZhou QianJin PharmaceuticalLtd's shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 27th of June.

The company's upcoming dividend is CN¥0.35 a share, following on from the last 12 months, when the company distributed a total of CN¥0.35 per share to shareholders. Calculating the last year's worth of payments shows that ZhuZhou QianJin PharmaceuticalLtd has a trailing yield of 3.4% on the current share price of CN¥10.20. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether ZhuZhou QianJin PharmaceuticalLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for ZhuZhou QianJin PharmaceuticalLtd

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 ZhuZhou QianJin PharmaceuticalLtd paying out a modest 46% of its earnings. 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. Thankfully its dividend payments took up just 34% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that ZhuZhou QianJin PharmaceuticalLtd'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 ZhuZhou QianJin PharmaceuticalLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at ZhuZhou QianJin PharmaceuticalLtd, with earnings per share up 4.5% on average over the last five years. Earnings per share growth in recent times has not been a standout. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, ZhuZhou QianJin PharmaceuticalLtd has lifted its dividend by approximately 8.8% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid ZhuZhou QianJin PharmaceuticalLtd? Earnings per share growth has been growing somewhat, and ZhuZhou QianJin PharmaceuticalLtd 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. It might be nice to see earnings growing faster, but ZhuZhou QianJin PharmaceuticalLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. ZhuZhou QianJin PharmaceuticalLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while ZhuZhou QianJin PharmaceuticalLtd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for ZhuZhou QianJin PharmaceuticalLtd that we recommend you consider before investing in the business.

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.

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