PharmaBlock Sciences (Nanjing), Inc. (SZSE:300725) Goes Ex-Dividend Soon

PharmaBlock Sciences (Nanjing), Inc. (SZSE:300725) stock is about to trade ex-dividend in 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase PharmaBlock Sciences (Nanjing)'s shares on or after the 14th of June, you won't be eligible to receive the dividend, when it is paid on the 14th of June.

The company's next dividend payment will be CN¥0.31 per share. Last year, in total, the company distributed CN¥0.31 to shareholders. Calculating the last year's worth of payments shows that PharmaBlock Sciences (Nanjing) has a trailing yield of 1.1% on the current share price of CN¥29.42. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for PharmaBlock Sciences (Nanjing)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see PharmaBlock Sciences (Nanjing) paying out a modest 33% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 71% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that PharmaBlock Sciences (Nanjing)'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?

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at PharmaBlock Sciences (Nanjing), with earnings per share up 5.9% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last six years, PharmaBlock Sciences (Nanjing) has lifted its dividend by approximately 26% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid PharmaBlock Sciences (Nanjing)? Earnings per share have been growing at a steady rate, and PharmaBlock Sciences (Nanjing) paid out less than half its profits and more than half its free cash flow as dividends over the last year. Overall, it's hard to get excited about PharmaBlock Sciences (Nanjing) from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 2 warning signs for PharmaBlock Sciences (Nanjing) that we recommend you consider before investing in the business.

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.