Haoyun Technologies Co.,Ltd. (SZSE:300448) stock is about to trade ex-dividend in day or two. 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Haoyun TechnologiesLtd's shares before the 29th of May in order to be eligible for the dividend, which will be paid on the 29th of May.

The company's next dividend payment will be CN¥0.018 per share. Last year, in total, the company distributed CN¥0.018 to shareholders. Calculating the last year's worth of payments shows that Haoyun TechnologiesLtd has a trailing yield of 0.4% on the current share price of CN¥4.20. If you buy this business for its dividend, you should have an idea of whether Haoyun TechnologiesLtd's dividend is reliable and sustainable. So we need to investigate whether Haoyun TechnologiesLtd can afford its dividend, and if the dividend could grow.

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. Haoyun TechnologiesLtd reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Haoyun TechnologiesLtd didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. What's good is that dividends were well covered by free cash flow, with the company paying out 9.4% of its cash flow last year.

Click here to see how much of its profit Haoyun TechnologiesLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Haoyun TechnologiesLtd was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Haoyun TechnologiesLtd has seen its dividend decline 1.1% per annum on average over the past eight years, which is not great to see.

Remember, you can always get a snapshot of Haoyun TechnologiesLtd's financial health, by checking our visualisation of its financial health, here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Haoyun TechnologiesLtd? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. It's not that we think Haoyun TechnologiesLtd is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

So if you're still interested in Haoyun TechnologiesLtd despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To that end, you should learn about the 2 warning signs we've spotted with Haoyun TechnologiesLtd (including 1 which shouldn't be ignored).

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.