Should Income Investors Look At Gan & Lee Pharmaceuticals. (SHSE:603087) Before Its Ex-Dividend?

It looks like Gan & Lee Pharmaceuticals. (SHSE:603087) is about to go ex-dividend in the next four days. 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 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. Thus, you can purchase Gan & Lee Pharmaceuticals' shares before the 18th of June in order to receive the dividend, which the company will pay on the 18th of June.

The company's upcoming dividend is CN¥0.20 a share, following on from the last 12 months, when the company distributed a total of CN¥0.20 per share to shareholders. Looking at the last 12 months of distributions, Gan & Lee Pharmaceuticals has a trailing yield of approximately 0.4% on its current stock price of CN¥47.79. If you buy this business for its dividend, you should have an idea of whether Gan & Lee Pharmaceuticals's dividend is reliable and sustainable. So we need to investigate whether Gan & Lee Pharmaceuticals can afford its dividend, and if the dividend could grow.

View our latest analysis for Gan & Lee Pharmaceuticals

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Gan & Lee Pharmaceuticals paid out a comfortable 30% of its profit last year.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Gan & Lee Pharmaceuticals's 19% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Gan & Lee Pharmaceuticals has seen its dividend decline 13% per annum on average over the past four years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Has Gan & Lee Pharmaceuticals got what it takes to maintain its dividend payments? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We think this is a pretty attractive combination, and would be interested in investigating Gan & Lee Pharmaceuticals more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Gan & Lee Pharmaceuticals has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.