Three Days Left To Buy Xinjiang Xinxin Mining Industry Co., Ltd. (HKG:3833) Before The Ex-Dividend Date

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Xinjiang Xinxin Mining Industry Co., Ltd. (HKG:3833) is about to go ex-dividend in just 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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 Xinjiang Xinxin Mining Industry's shares before the 3rd of July in order to be eligible for the dividend, which will be paid on the 1st of January.

The company's next dividend payment will be CN¥0.05 per share, and in the last 12 months, the company paid a total of CN¥0.05 per share. Based on the last year's worth of payments, Xinjiang Xinxin Mining Industry has a trailing yield of 5.4% on the current stock price of HK$1.02. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Xinjiang Xinxin Mining Industry can afford its dividend, and if the dividend could grow.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Xinjiang Xinxin Mining Industry is paying out an acceptable 59% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Xinjiang Xinxin Mining Industry generated enough free cash flow to afford its dividend. It paid out 103% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.

Xinjiang Xinxin Mining Industry paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to Xinjiang Xinxin Mining Industry's ability to maintain its dividend.

View our latest analysis for Xinjiang Xinxin Mining Industry

Click here to see how much of its profit Xinjiang Xinxin Mining Industry 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Xinjiang Xinxin Mining Industry's earnings have been skyrocketing, up 47% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Xinjiang Xinxin Mining Industry has seen its dividend decline 42% per annum on average over the past two years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is Xinjiang Xinxin Mining Industry worth buying for its dividend? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note Xinjiang Xinxin Mining Industry paid out a much higher percentage of its free cash flow, which makes us uncomfortable. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

With that being said, if dividends aren't your biggest concern with Xinjiang Xinxin Mining Industry, you should know about the other risks facing this business. Every company has risks, and we've spotted 1 warning sign for Xinjiang Xinxin Mining Industry you should know about.

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.