Just Four Days Till Dynagreen Environmental Protection Group Co., Ltd. (HKG:1330) Will Be Trading Ex-Dividend

Dynagreen Environmental Protection Group Co., Ltd. (HKG:1330) is about to trade ex-dividend in the next 4 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 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. Therefore, if you purchase Dynagreen Environmental Protection Group's shares on or after the 6th of May, you won't be eligible to receive the dividend, when it is paid on the 30th of June.

The company's next dividend payment will be CN¥0.15 per share. Last year, in total, the company distributed CN¥0.15 to shareholders. Calculating the last year's worth of payments shows that Dynagreen Environmental Protection Group has a trailing yield of 5.7% on the current share price of HK$2.85. If you buy this business for its dividend, you should have an idea of whether Dynagreen Environmental Protection Group'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 Dynagreen Environmental Protection Group

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 Dynagreen Environmental Protection Group paying out a modest 35% of its earnings. A useful secondary check can be to evaluate whether Dynagreen Environmental Protection Group generated enough free cash flow to afford its dividend. Over the past year it paid out 133% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While Dynagreen Environmental Protection Group's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Dynagreen Environmental Protection Group to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit Dynagreen Environmental Protection Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Dynagreen Environmental Protection Group earnings per share are up 5.4% per annum over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Dynagreen Environmental Protection Group has delivered an average of 22% per year annual increase in its dividend, based on the past eight years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is Dynagreen Environmental Protection Group worth buying for its dividend? Dynagreen Environmental Protection Group has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. To summarise, Dynagreen Environmental Protection Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into Dynagreen Environmental Protection Group, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Dynagreen Environmental Protection Group (of which 1 is a bit concerning!) you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.