Shandong Jincheng Pharmaceutical Group Co., Ltd (SZSE:300233) Is About To Go Ex-Dividend, And It Pays A 1.8% Yield

Shandong Jincheng Pharmaceutical Group Co., Ltd (SZSE:300233) is about to trade ex-dividend in the next 3 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Shandong Jincheng Pharmaceutical Group's shares before the 20th of September in order to receive the dividend, which the company will pay on the 20th of September.

The company's next dividend payment will be CN¥0.10 per share, on the back of last year when the company paid a total of CN¥0.20 to shareholders. Looking at the last 12 months of distributions, Shandong Jincheng Pharmaceutical Group has a trailing yield of approximately 1.8% on its current stock price of CN¥10.99. If you buy this business for its dividend, you should have an idea of whether Shandong Jincheng Pharmaceutical Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Shandong Jincheng Pharmaceutical Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Shandong Jincheng Pharmaceutical Group is paying out an acceptable 57% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 35% of its free cash flow in the past year.

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 Shandong Jincheng Pharmaceutical Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Shandong Jincheng Pharmaceutical Group's earnings per share have been shrinking at 4.3% a year over the previous 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, 10 years ago, Shandong Jincheng Pharmaceutical Group has lifted its dividend by approximately 7.2% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

To Sum It Up

Has Shandong Jincheng Pharmaceutical Group got what it takes to maintain its dividend payments? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Shandong Jincheng Pharmaceutical Group's dividend merits.

So if you want to do more digging on Shandong Jincheng Pharmaceutical Group, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 1 warning sign for Shandong Jincheng Pharmaceutical Group that we recommend you consider before investing in the business.

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.