Nacity Property Service Group Co.,Ltd. (SHSE:603506) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy Nacity Property Service Group Co.,Ltd. (SHSE:603506) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. This means that investors who purchase Nacity Property Service GroupLtd's shares on or after the 12th of June will not receive the dividend, which will be paid on the 12th of June.

The company's next dividend payment will be CN¥0.35057 per share, and in the last 12 months, the company paid a total of CN¥0.35 per share. Looking at the last 12 months of distributions, Nacity Property Service GroupLtd has a trailing yield of approximately 3.8% on its current stock price of CN¥9.21. If you buy this business for its dividend, you should have an idea of whether Nacity Property Service GroupLtd's dividend is reliable and sustainable. As a result, readers should always check whether Nacity Property Service GroupLtd has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Nacity Property Service GroupLtd

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. That's why it's good to see Nacity Property Service GroupLtd paying out a modest 39% of its earnings. A useful secondary check can be to evaluate whether Nacity Property Service GroupLtd generated enough free cash flow to afford its dividend. It paid out 76% 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 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 Nacity Property Service GroupLtd paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Nacity Property Service GroupLtd's earnings per share have been growing at 12% a year for the past five years. It paid out more than three-quarters of its earnings in the last year, even though earnings per share are growing rapidly. We're surprised that management has not elected to reinvest more in the business to accelerate growth further.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, six years ago, Nacity Property Service GroupLtd has lifted its dividend by approximately 18% 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

Should investors buy Nacity Property Service GroupLtd for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. Nacity Property Service GroupLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Nacity Property Service GroupLtd has an appealing dividend, it's worth knowing the risks involved with this stock. For example, Nacity Property Service GroupLtd has 3 warning signs (and 2 which can't be ignored) we think you should know about.

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.