Be Sure To Check Out Anhui Fengyuan Pharmaceutical Co., Ltd. (SZSE:000153) Before It Goes Ex-Dividend

Anhui Fengyuan Pharmaceutical Co., Ltd. (SZSE:000153) stock is about to trade ex-dividend in three 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Anhui Fengyuan Pharmaceutical's shares before the 7th of June in order to receive the dividend, which the company will pay on the 7th of June.

The company's next dividend payment will be CN¥0.15 per share, and in the last 12 months, the company paid a total of CN¥0.15 per share. Looking at the last 12 months of distributions, Anhui Fengyuan Pharmaceutical has a trailing yield of approximately 1.8% on its current stock price of CN¥8.55. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Anhui Fengyuan Pharmaceutical

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. Fortunately Anhui Fengyuan Pharmaceutical's payout ratio is modest, at just 31% of profit. A useful secondary check can be to evaluate whether Anhui Fengyuan Pharmaceutical generated enough free cash flow to afford its dividend. It paid out more than half (64%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Anhui Fengyuan Pharmaceutical paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Anhui Fengyuan Pharmaceutical has grown its earnings rapidly, up 20% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, eight years ago, Anhui Fengyuan Pharmaceutical has lifted its dividend by approximately 5.2% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Anhui Fengyuan Pharmaceutical is keeping back more of its profits to grow the business.

The Bottom Line

Is Anhui Fengyuan Pharmaceutical worth buying for its dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Anhui Fengyuan Pharmaceutical paid out less than half its earnings and a bit over half its free cash flow. Anhui Fengyuan Pharmaceutical looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Anhui Fengyuan Pharmaceutical has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Anhui Fengyuan Pharmaceutical has 2 warning signs we think you should be aware of.

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.