One Day Left Until Joinn Laboratories(China)Co.,Ltd. (SHSE:603127) Trades Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Joinn Laboratories(China)Co.,Ltd. (SHSE:603127) is about to trade ex-dividend in the next day or two. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase Joinn Laboratories(China)Co.Ltd's shares on or after the 31st of July, you won't be eligible to receive the dividend, when it is paid on the 31st of July.

The company's next dividend payment will be CN¥0.16 per share. Last year, in total, the company distributed CN¥0.16 to shareholders. Calculating the last year's worth of payments shows that Joinn Laboratories(China)Co.Ltd has a trailing yield of 1.1% on the current share price of CN¥13.97. If you buy this business for its dividend, you should have an idea of whether Joinn Laboratories(China)Co.Ltd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Joinn Laboratories(China)Co.Ltd

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Joinn Laboratories(China)Co.Ltd's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Thankfully its dividend payments took up just 38% of the free cash flow it generated, which is a comfortable payout ratio.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Joinn Laboratories(China)Co.Ltd reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Joinn Laboratories(China)Co.Ltd has delivered an average of 26% per year annual increase in its dividend, based on the past six years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

We update our analysis on Joinn Laboratories(China)Co.Ltd every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

Is Joinn Laboratories(China)Co.Ltd an attractive dividend stock, or better left on the shelf? It's hard to get used to Joinn Laboratories(China)Co.Ltd paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. All things considered, we are not particularly enthused about Joinn Laboratories(China)Co.Ltd from a dividend perspective.

In light of that, while Joinn Laboratories(China)Co.Ltd has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 1 warning sign for Joinn Laboratories(China)Co.Ltd you should know about.

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.

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