Be Sure To Check Out Chengdu Jiafaantai Education Technology Co.,Ltd. (SZSE:300559) Before It Goes Ex-Dividend

Readers hoping to buy Chengdu Jiafaantai Education Technology Co.,Ltd. (SZSE:300559) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. This means that investors who purchase Chengdu Jiafaantai Education TechnologyLtd's shares on or after the 14th of May will not receive the dividend, which will be paid on the 14th of May.

The company's upcoming dividend is CN¥0.15 a share, following on from the last 12 months, when the company distributed a total of CN¥0.15 per share to shareholders. Looking at the last 12 months of distributions, Chengdu Jiafaantai Education TechnologyLtd has a trailing yield of approximately 1.3% on its current stock price of CN¥11.28. If you buy this business for its dividend, you should have an idea of whether Chengdu Jiafaantai Education TechnologyLtd's dividend is reliable and sustainable. As a result, readers should always check whether Chengdu Jiafaantai Education TechnologyLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Chengdu Jiafaantai Education TechnologyLtd

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 Chengdu Jiafaantai Education TechnologyLtd paying out a modest 44% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 19% of its free cash flow in the last year.

It's positive to see that Chengdu Jiafaantai Education TechnologyLtd's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Chengdu Jiafaantai Education TechnologyLtd's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Earnings per share growth in recent times has not been a standout. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last seven years, Chengdu Jiafaantai Education TechnologyLtd has lifted its dividend by approximately 24% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid Chengdu Jiafaantai Education TechnologyLtd? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and Chengdu Jiafaantai Education TechnologyLtd is halfway there. It's a promising combination that should mark this company worthy of closer attention.

In light of that, while Chengdu Jiafaantai Education TechnologyLtd has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with Chengdu Jiafaantai Education TechnologyLtd and understanding them should be part of your investment process.

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.