Livzon Pharmaceutical Group Inc. (SZSE:000513) Goes Ex-Dividend Soon

It looks like Livzon Pharmaceutical Group Inc. (SZSE:000513) is about to go ex-dividend in the next 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. 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 Livzon Pharmaceutical Group's shares before the 8th of July in order to receive the dividend, which the company will pay on the 8th of July.

The company's next dividend payment will be CN¥1.35 per share. Last year, in total, the company distributed CN¥1.35 to shareholders. Looking at the last 12 months of distributions, Livzon Pharmaceutical Group has a trailing yield of approximately 3.7% on its current stock price of CN¥36.20. If you buy this business for its dividend, you should have an idea of whether Livzon Pharmaceutical Group's dividend is reliable and sustainable. As a result, readers should always check whether Livzon Pharmaceutical Group has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Livzon Pharmaceutical Group

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. Livzon Pharmaceutical Group paid out 63% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 52% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Livzon Pharmaceutical Group'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?

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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Livzon Pharmaceutical Group's earnings per share have been growing at 13% a year for the past five years. Livzon Pharmaceutical Group is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Livzon Pharmaceutical Group has lifted its dividend by approximately 23% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Livzon Pharmaceutical Group? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Livzon Pharmaceutical Group's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 63% and 52% respectively. To summarise, Livzon Pharmaceutical Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in Livzon Pharmaceutical Group for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Livzon Pharmaceutical Group you should be aware of.

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