It looks like Xinhua Winshare Publishing and Media Co., Ltd. (HKG:811) is about to go ex-dividend in the next four days. 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. Therefore, if you purchase Xinhua Winshare Publishing and Media's shares on or after the 26th of May, you won't be eligible to receive the dividend, when it is paid on the 21st of July.
The company's upcoming dividend is CN¥0.31 a share, following on from the last 12 months, when the company distributed a total of CN¥0.31 per share to shareholders. Based on the last year's worth of payments, Xinhua Winshare Publishing and Media stock has a trailing yield of around 6.3% on the current share price of HK$5.9. If you buy this business for its dividend, you should have an idea of whether Xinhua Winshare Publishing and Media's dividend is reliable and sustainable. As a result, readers should always check whether Xinhua Winshare Publishing and Media has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Xinhua Winshare Publishing and Media paid out a comfortable 30% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 25% of its cash flow last year.
It's positive to see that Xinhua Winshare Publishing and Media's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Xinhua Winshare Publishing and Media's earnings per share have risen 12% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Xinhua Winshare Publishing and Media's dividend payments are effectively flat on where they were 10 years ago.
Is Xinhua Winshare Publishing and Media worth buying for its dividend? It's great that Xinhua Winshare Publishing and Media is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Overall we think this is an attractive combination and worthy of further research.
On that note, you'll want to research what risks Xinhua Winshare Publishing and Media is facing. Our analysis shows 1 warning sign for Xinhua Winshare Publishing and Media and you should be aware of it before buying any shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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.
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