Is It Worth Considering Beijing Jiaxun Feihong Electrical Co., Ltd. (SZSE:300213) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Beijing Jiaxun Feihong Electrical Co., Ltd. (SZSE:300213) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Beijing Jiaxun Feihong Electrical's shares before the 24th of May in order to receive the dividend, which the company will pay on the 24th of May.

The company's next dividend payment will be CN¥0.05 per share, and in the last 12 months, the company paid a total of CN¥0.05 per share. Looking at the last 12 months of distributions, Beijing Jiaxun Feihong Electrical has a trailing yield of approximately 0.7% on its current stock price of CN¥6.69. 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 check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Beijing Jiaxun Feihong Electrical

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. Fortunately Beijing Jiaxun Feihong Electrical's payout ratio is modest, at just 45% of profit. A useful secondary check can be to evaluate whether Beijing Jiaxun Feihong Electrical generated enough free cash flow to afford its dividend. Dividends consumed 68% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 Beijing Jiaxun Feihong Electrical paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Beijing Jiaxun Feihong Electrical's earnings per share have dropped 12% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

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, Beijing Jiaxun Feihong Electrical has lifted its dividend by approximately 13% a year on average.

The Bottom Line

Is Beijing Jiaxun Feihong Electrical an attractive dividend stock, or better left on the shelf? Earnings per share have fallen significantly, although at least Beijing Jiaxun Feihong Electrical paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. Overall, it's hard to get excited about Beijing Jiaxun Feihong Electrical from a dividend perspective.

However if you're still interested in Beijing Jiaxun Feihong Electrical as a potential investment, you should definitely consider some of the risks involved with Beijing Jiaxun Feihong Electrical. Our analysis shows 1 warning sign for Beijing Jiaxun Feihong Electrical and you should be aware of this before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.