Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. In other words, investors can purchase Shanghai Chicmax Cosmetic's shares before the 3rd of June in order to be eligible for the dividend, which will be paid on the 28th of June.

The company's next dividend payment will be CN¥0.75 per share, on the back of last year when the company paid a total of CN¥0.40 to shareholders. Looking at the last 12 months of distributions, Shanghai Chicmax Cosmetic has a trailing yield of approximately 2.3% on its current stock price of HK$44.85. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Shanghai Chicmax Cosmetic

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 82% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline.

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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Shanghai Chicmax Cosmetic's earnings have been skyrocketing, up 46% per annum for the past five years.

We'd also point out that Shanghai Chicmax Cosmetic issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

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

The Bottom Line

Has Shanghai Chicmax Cosmetic got what it takes to maintain its dividend payments? Shanghai Chicmax Cosmetic has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Shanghai Chicmax Cosmetic ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

Wondering what the future holds for Shanghai Chicmax Cosmetic? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.