Three Days Left Until Sunflower Pharmaceutical Group Co.,Ltd (SZSE:002737) Trades Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sunflower Pharmaceutical Group Co.,Ltd (SZSE:002737) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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. Meaning, you will need to purchase Sunflower Pharmaceutical GroupLtd's shares before the 14th of June to receive the dividend, which will be paid on the 14th of June.

The company's next dividend payment will be CN¥1.50 per share. Last year, in total, the company distributed CN¥1.50 to shareholders. Last year's total dividend payments show that Sunflower Pharmaceutical GroupLtd has a trailing yield of 5.0% on the current share price of CN¥29.89. If you buy this business for its dividend, you should have an idea of whether Sunflower Pharmaceutical GroupLtd's dividend is reliable and sustainable. So we need to investigate whether Sunflower Pharmaceutical GroupLtd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Sunflower Pharmaceutical GroupLtd

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. Last year, Sunflower Pharmaceutical GroupLtd paid out 90% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business. A useful secondary check can be to evaluate whether Sunflower Pharmaceutical GroupLtd generated enough free cash flow to afford its dividend. It paid out 81% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's good to see that while Sunflower Pharmaceutical GroupLtd's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Sunflower Pharmaceutical GroupLtd 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. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Sunflower Pharmaceutical GroupLtd's earnings per share have risen 12% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past nine years, Sunflower Pharmaceutical GroupLtd has increased its dividend at approximately 37% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Has Sunflower Pharmaceutical GroupLtd got what it takes to maintain its dividend payments? Sunflower Pharmaceutical GroupLtd has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. In summary, while it has some positive characteristics, we're not inclined to race out and buy Sunflower Pharmaceutical GroupLtd today.

However if you're still interested in Sunflower Pharmaceutical GroupLtd as a potential investment, you should definitely consider some of the risks involved with Sunflower Pharmaceutical GroupLtd. Case in point: We've spotted 1 warning sign for Sunflower Pharmaceutical GroupLtd 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.