Only Three Days Left To Cash In On Shanghai @hubLtd's (SHSE:603881) Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Shanghai @hub Co.,Ltd. (SHSE:603881) is about to go ex-dividend in just three 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Shanghai @hubLtd's shares on or after the 15th of October, you won't be eligible to receive the dividend, when it is paid on the 15th of October.

The company's next dividend payment will be CN¥0.024 per share. Last year, in total, the company distributed CN¥0.062 to shareholders. Looking at the last 12 months of distributions, Shanghai @hubLtd has a trailing yield of approximately 0.3% on its current stock price of CN¥15.27. If you buy this business for its dividend, you should have an idea of whether Shanghai @hubLtd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Shanghai @hubLtd

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 Shanghai @hubLtd paying out a modest 40% 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. What's good is that dividends were well covered by free cash flow, with the company paying out 18% of its cash flow last 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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see Shanghai @hubLtd's earnings per share have been shrinking at 4.8% 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. Shanghai @hubLtd has delivered 17% dividend growth per year on average over the past seven years.

Final Takeaway

Is Shanghai @hubLtd an attractive dividend stock, or better left on the shelf? Shanghai @hubLtd 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. In summary, it's hard to get excited about Shanghai @hubLtd from a dividend perspective.

On that note, you'll want to research what risks Shanghai @hubLtd is facing. In terms of investment risks, we've identified 1 warning sign with Shanghai @hubLtd and understanding them should be part of your investment process.

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.