Sailvan Times Co., Ltd. (SZSE:301381) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Sailvan Times Co., Ltd. (SZSE:301381) is about to go ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Sailvan Times' shares on or after the 24th of September, you won't be eligible to receive the dividend, when it is paid on the 24th of September.

The company's next dividend payment will be CN¥0.30 per share. If you buy this business for its dividend, you should have an idea of whether Sailvan Times's dividend is reliable and sustainable. As a result, readers should always check whether Sailvan Times has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Sailvan Times

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. Sailvan Times is paying out an acceptable 52% of its profit, a common payout level among most companies. 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 more than half (73%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Sailvan Times'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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Sailvan Times earnings per share are up 8.4% per annum over the last five years. Decent historical earnings per share growth suggests Sailvan Times has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Sailvan Times also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

This is Sailvan Times's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

The Bottom Line

Should investors buy Sailvan Times for the upcoming dividend? Earnings per share have been growing modestly and Sailvan Times paid out a bit over half of its earnings and free cash flow last year. In summary, while it has some positive characteristics, we're not inclined to race out and buy Sailvan Times today.

So if you want to do more digging on Sailvan Times, you'll find it worthwhile knowing the risks that this stock faces. For example - Sailvan Times has 1 warning sign we think you should be aware of.

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.