Shenzhen TVT Digital Technology Co., Ltd. (SZSE:002835) Looks Interesting, And It's About To Pay A Dividend

Shenzhen TVT Digital Technology Co., Ltd. (SZSE:002835) stock is about to trade ex-dividend in 3 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. Meaning, you will need to purchase Shenzhen TVT Digital Technology's shares before the 30th of May to receive the dividend, which will be paid on the 30th of May.

The company's upcoming dividend is CN¥0.21 a share, following on from the last 12 months, when the company distributed a total of CN¥0.21 per share to shareholders. Last year's total dividend payments show that Shenzhen TVT Digital Technology has a trailing yield of 1.2% on the current share price of CN¥17.72. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Shenzhen TVT Digital Technology

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. Shenzhen TVT Digital Technology paid out just 25% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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 18% of its free cash flow as dividends last year, which is conservatively low.

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 Shenzhen TVT Digital Technology paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Shenzhen TVT Digital Technology's earnings have been skyrocketing, up 112% per annum for the past five years. Shenzhen TVT Digital Technology earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Shenzhen TVT Digital Technology has delivered 16% dividend growth per year on average over the past seven years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is Shenzhen TVT Digital Technology an attractive dividend stock, or better left on the shelf? It's great that Shenzhen TVT Digital Technology is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Shenzhen TVT Digital Technology looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Shenzhen TVT Digital Technology is facing. Our analysis shows 2 warning signs for Shenzhen TVT Digital Technology and you should be aware of them before buying any shares.

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.