Income Investors Should Know That WEILONG Delicious Global Holdings Ltd (HKG:9985) Goes Ex-Dividend Soon

Readers hoping to buy WEILONG Delicious Global Holdings Ltd (HKG:9985) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Accordingly, WEILONG Delicious Global Holdings investors that purchase the stock on or after the 23rd of September will not receive the dividend, which will be paid on the 18th of October.

The company's upcoming dividend is CN¥0.16 a share, following on from the last 12 months, when the company distributed a total of CN¥0.31 per share to shareholders. Looking at the last 12 months of distributions, WEILONG Delicious Global Holdings has a trailing yield of approximately 5.1% on its current stock price of HK$6.63. If you buy this business for its dividend, you should have an idea of whether WEILONG Delicious Global Holdings's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for WEILONG Delicious Global Holdings

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. WEILONG Delicious Global Holdings is paying out an acceptable 57% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 80% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see WEILONG Delicious Global Holdings earnings per share are up 6.3% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Given that WEILONG Delicious Global Holdings has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is WEILONG Delicious Global Holdings worth buying for its dividend? Earnings per share have been growing modestly and WEILONG Delicious Global Holdings paid out a bit over half of its earnings and free cash flow last year. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

If you want to look further into WEILONG Delicious Global Holdings, it's worth knowing the risks this business faces. In terms of investment risks, we've identified 1 warning sign with WEILONG Delicious Global Holdings and understanding them should be part of your investment process.

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.