Just Two Days Till Lanzhou Lishang Guochao Industrial Group Co.,Ltd (SHSE:600738) Will Be Trading Ex-Dividend

Lanzhou Lishang Guochao Industrial Group Co.,Ltd (SHSE:600738) stock is about to trade ex-dividend in two days. 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 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 Lanzhou Lishang Guochao Industrial GroupLtd's shares before the 27th of June to receive the dividend, which will be paid on the 27th of June.

The company's upcoming dividend is CN¥0.04 a share, following on from the last 12 months, when the company distributed a total of CN¥0.04 per share to shareholders. Looking at the last 12 months of distributions, Lanzhou Lishang Guochao Industrial GroupLtd has a trailing yield of approximately 1.1% on its current stock price of CN¥3.69. If you buy this business for its dividend, you should have an idea of whether Lanzhou Lishang Guochao Industrial GroupLtd's dividend is reliable and sustainable. As a result, readers should always check whether Lanzhou Lishang Guochao Industrial GroupLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Lanzhou Lishang Guochao Industrial 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. Lanzhou Lishang Guochao Industrial GroupLtd has a low and conservative payout ratio of just 24% of its income after tax. 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. It paid out 13% of its free cash flow as dividends last year, which is conservatively low.

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 Lanzhou Lishang Guochao Industrial GroupLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Lanzhou Lishang Guochao Industrial GroupLtd's earnings per share have plummeted approximately 40% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Lanzhou Lishang Guochao Industrial GroupLtd's dividend payments per share have declined at 8.8% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Is Lanzhou Lishang Guochao Industrial GroupLtd an attractive dividend stock, or better left on the shelf? Lanzhou Lishang Guochao Industrial GroupLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

In light of that, while Lanzhou Lishang Guochao Industrial GroupLtd has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Lanzhou Lishang Guochao Industrial GroupLtd that we recommend you consider before investing in the business.

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.

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