Shiyue Daotian Group Co., Ltd. (HKG:9676) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Shiyue Daotian Group Co., Ltd. (HKG:9676) is about to go ex-dividend in the next 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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. Accordingly, Shiyue Daotian Group investors that purchase the stock on or after the 30th of June will not receive the dividend, which will be paid on the 18th of July.

The company's next dividend payment will be CN¥0.164 per share, and in the last 12 months, the company paid a total of CN¥0.16 per share. Based on the last year's worth of payments, Shiyue Daotian Group has a trailing yield of 2.7% on the current stock price of HK$6.75. 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 investigate whether Shiyue Daotian Group can afford its dividend, and if the dividend could grow.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Its dividend payout ratio is 86% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. A useful secondary check can be to evaluate whether Shiyue Daotian Group generated enough free cash flow to afford its dividend. It paid out 7.0% 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.

View our latest analysis for Shiyue Daotian Group

Click here to see how much of its profit Shiyue Daotian Group 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 Shiyue Daotian Group's earnings have been skyrocketing, up 58% per annum for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.

Shiyue Daotian Group also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Unfortunately Shiyue Daotian Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Has Shiyue Daotian Group got what it takes to maintain its dividend payments? Shiyue Daotian Group's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Shiyue Daotian Group 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 Shiyue Daotian Group is facing. Case in point: We've spotted 1 warning sign for Shiyue Daotian Group you should be aware of.

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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.