Dividend Investors: Don't Be Too Quick To Buy China Everbright Limited (HKG:165) 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 China Everbright Limited (HKG:165) 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase China Everbright's shares on or after the 28th of May will not receive the dividend, which will be paid on the 14th of June.

The company's upcoming dividend is HK$0.10 a share, following on from the last 12 months, when the company distributed a total of HK$0.20 per share to shareholders. Based on the last year's worth of payments, China Everbright has a trailing yield of 4.4% on the current stock price of HK$4.56. If you buy this business for its dividend, you should have an idea of whether China Everbright'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 China Everbright

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. China Everbright reported a loss last year, so it's not great to see that it has continued paying a dividend.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. China Everbright reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. China Everbright's dividend payments per share have declined at 4.3% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

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

Final Takeaway

Is China Everbright an attractive dividend stock, or better left on the shelf? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. China Everbright doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that being said, if you're still considering China Everbright as an investment, you'll find it beneficial to know what risks this stock is facing. For example, we've found 3 warning signs for China Everbright (2 don't sit too well with us!) that deserve your attention before investing in the 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.