Circuit Fabology Microelectronics Equipment Co.,Ltd. (SHSE:688630) Pays A CN¥0.80 Dividend In Just Four Days

It looks like Circuit Fabology Microelectronics Equipment Co.,Ltd. (SHSE:688630) is about to go ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a 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 Circuit Fabology Microelectronics EquipmentLtd's shares on or after the 5th of June will not receive the dividend, which will be paid on the 5th of June.

The company's next dividend payment will be CN¥0.80 per share, on the back of last year when the company paid a total of CN¥0.80 to shareholders. Based on the last year's worth of payments, Circuit Fabology Microelectronics EquipmentLtd stock has a trailing yield of around 1.2% on the current share price of CN¥64.80. If you buy this business for its dividend, you should have an idea of whether Circuit Fabology Microelectronics EquipmentLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Circuit Fabology Microelectronics EquipmentLtd

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. Circuit Fabology Microelectronics EquipmentLtd is paying out an acceptable 55% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Circuit Fabology Microelectronics EquipmentLtd's earnings have been skyrocketing, up 22% per annum for the past five years.

We'd also point out that Circuit Fabology Microelectronics EquipmentLtd issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past two years, Circuit Fabology Microelectronics EquipmentLtd has increased its dividend at approximately 100% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

From a dividend perspective, should investors buy or avoid Circuit Fabology Microelectronics EquipmentLtd? It's good to see that earnings per share are growing and that the company's payout ratio is within a normal range for most businesses. However we're somewhat concerned that it paid out -0.6% of its cashflow, which is uncomfortably high. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Circuit Fabology Microelectronics EquipmentLtd's dividend merits.

If you're not too concerned about Circuit Fabology Microelectronics EquipmentLtd's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Be aware that Circuit Fabology Microelectronics EquipmentLtd is showing 3 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

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.