Stock Analysis

Don't Race Out To Buy Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) Just Because It's Going Ex-Dividend

Published
SEHK:2318

It looks like Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) is about to go 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Ping An Insurance (Group) Company of China's shares on or after the 11th of September will not receive the dividend, which will be paid on the 25th of October.

The company's next dividend payment will be CN¥0.93 per share. Last year, in total, the company distributed CN¥2.45 to shareholders. Calculating the last year's worth of payments shows that Ping An Insurance (Group) Company of China has a trailing yield of 5.4% on the current share price of HK$48.45. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Ping An Insurance (Group) Company of China

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. Ping An Insurance (Group) Company of China is paying out an acceptable 52% of its profit, a common payout level among most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

SEHK:2318 Historic Dividend September 6th 2023

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Ping An Insurance (Group) Company of China's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Ping An Insurance (Group) Company of China has lifted its dividend by approximately 28% a year on average.

The Bottom Line

Is Ping An Insurance (Group) Company of China an attractive dividend stock, or better left on the shelf? Ping An Insurance (Group) Company of China's earnings per share have been essentially flat, and the company is paying out more than half of its earnings as dividends to shareholders. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of Ping An Insurance (Group) Company of China don't faze you, it's worth being mindful of the risks involved with this business. For example, we've found 1 warning sign for Ping An Insurance (Group) Company of China that we recommend you consider before investing in the business.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.