Here's What We Like About Yangzhou Yangjie Electronic Technology's (SZSE:300373) Upcoming Dividend

Yangzhou Yangjie Electronic Technology Co., Ltd. (SZSE:300373) stock is about to trade ex-dividend in 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. This means that investors who purchase Yangzhou Yangjie Electronic Technology's shares on or after the 28th of May will not receive the dividend, which will be paid on the 28th of May.

The company's next dividend payment will be CN¥0.60 per share, and in the last 12 months, the company paid a total of CN¥0.60 per share. Looking at the last 12 months of distributions, Yangzhou Yangjie Electronic Technology has a trailing yield of approximately 1.7% on its current stock price of CN¥35.54. If you buy this business for its dividend, you should have an idea of whether Yangzhou Yangjie Electronic Technology'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.

Check out our latest analysis for Yangzhou Yangjie Electronic Technology

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. That's why it's good to see Yangzhou Yangjie Electronic Technology paying out a modest 35% of its earnings. 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 (65%) of its free cash flow in the past year, which is within an average range for most companies.

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 the company's payout ratio, plus analyst estimates of its future dividends.

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Yangzhou Yangjie Electronic Technology's earnings have been skyrocketing, up 34% per annum for the past five years.

Yangzhou Yangjie Electronic Technology 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.

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, 10 years ago, Yangzhou Yangjie Electronic Technology has lifted its dividend by approximately 30% 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

From a dividend perspective, should investors buy or avoid Yangzhou Yangjie Electronic Technology? Earnings per share have grown at a nice rate in recent times and over the last year, Yangzhou Yangjie Electronic Technology paid out less than half its earnings and a bit over half its free cash flow. Yangzhou Yangjie Electronic Technology looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while Yangzhou Yangjie Electronic Technology looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Yangzhou Yangjie Electronic Technology has 2 warning signs we think you should be aware of.

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.