Don't Buy Haoyun Technologies Co.,Ltd. (SZSE:300448) For Its Next Dividend Without Doing These Checks

Haoyun Technologies Co.,Ltd. (SZSE:300448) stock is about to trade ex-dividend in two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Thus, you can purchase Haoyun TechnologiesLtd's shares before the 29th of May in order to receive the dividend, which the company will pay on the 29th of May.

The company's next dividend payment will be CN¥0.018 per share, and in the last 12 months, the company paid a total of CN¥0.018 per share. Based on the last year's worth of payments, Haoyun TechnologiesLtd stock has a trailing yield of around 0.4% on the current share price of CN¥4.20. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Haoyun TechnologiesLtd can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Haoyun TechnologiesLtd

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. Haoyun TechnologiesLtd reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out 9.4% of its free cash flow as dividends last year, which is conservatively low.

Click here to see how much of its profit Haoyun TechnologiesLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Haoyun TechnologiesLtd was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Haoyun TechnologiesLtd's dividend payments per share have declined at 1.1% per year on average over the past eight years, which is uninspiring.

We update our analysis on Haoyun TechnologiesLtd every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Is Haoyun TechnologiesLtd an attractive dividend stock, or better left on the shelf? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Haoyun TechnologiesLtd. For instance, we've identified 2 warning signs for Haoyun TechnologiesLtd (1 is a bit concerning) 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.