SMO ClinPlus CO.,LTD. (SZSE:301257) Passed Our Checks, And It's About To Pay A CN¥0.166 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see SMO ClinPlus CO.,LTD. (SZSE:301257) is about to trade ex-dividend in the next 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. 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 SMO ClinPlusLTD's shares before the 6th of June to receive the dividend, which will be paid on the 6th of June.

The company's upcoming dividend is CN¥0.166 a share, following on from the last 12 months, when the company distributed a total of CN¥0.23 per share to shareholders. Last year's total dividend payments show that SMO ClinPlusLTD has a trailing yield of 0.5% on the current share price of CN¥42.76. If you buy this business for its dividend, you should have an idea of whether SMO ClinPlusLTD'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.

See our latest analysis for SMO ClinPlusLTD

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. SMO ClinPlusLTD paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 14% of its cash flow last year.

It's positive to see that SMO ClinPlusLTD'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 how much of its profit SMO ClinPlusLTD 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. That's why it's comforting to see SMO ClinPlusLTD's earnings have been skyrocketing, up 26% per annum for the past five years. SMO ClinPlusLTD earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Unfortunately SMO ClinPlusLTD has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is SMO ClinPlusLTD worth buying for its dividend? SMO ClinPlusLTD has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. There's a lot to like about SMO ClinPlusLTD, and we would prioritise taking a closer look at it.

So while SMO ClinPlusLTD looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 1 warning sign for SMO ClinPlusLTD you should know about.

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.