INESA Intelligent Tech Inc. (SHSE:600602) Is About To Go Ex-Dividend, And It Pays A 0.4% Yield

It looks like INESA Intelligent Tech Inc. (SHSE:600602) is about to go ex-dividend in the next 3 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. In other words, investors can purchase INESA Intelligent Tech's shares before the 28th of June in order to be eligible for the dividend, which will be paid on the 28th of June.

The company's next dividend payment will be CN¥0.043 per share, and in the last 12 months, the company paid a total of CN¥0.043 per share. Calculating the last year's worth of payments shows that INESA Intelligent Tech has a trailing yield of 0.4% on the current share price of CN¥11.21. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for INESA Intelligent Tech

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 INESA Intelligent Tech paying out a modest 28% of its earnings. A useful secondary check can be to evaluate whether INESA Intelligent Tech generated enough free cash flow to afford its dividend. Fortunately, it paid out only 34% of its free cash flow in the past year.

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 INESA Intelligent Tech paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that INESA Intelligent Tech's earnings are down 4.9% a year over the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last eight years, INESA Intelligent Tech has lifted its dividend by approximately 1.9% a year on average.

To Sum It Up

From a dividend perspective, should investors buy or avoid INESA Intelligent Tech? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about INESA Intelligent Tech from a dividend perspective.

Want to learn more about INESA Intelligent Tech's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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.

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