Central China Land Media CO.,LTD (SZSE:000719) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Central China Land MediaLTD's shares before the 26th of June in order to receive the dividend, which the company will pay on the 26th of June.

The company's upcoming dividend is CN¥0.42 a share, following on from the last 12 months, when the company distributed a total of CN¥0.42 per share to shareholders. Based on the last year's worth of payments, Central China Land MediaLTD stock has a trailing yield of around 3.9% on the current share price of CN¥10.74. If you buy this business for its dividend, you should have an idea of whether Central China Land MediaLTD's dividend is reliable and sustainable. So we need to investigate whether Central China Land MediaLTD can afford its dividend, and if the dividend could grow.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Central China Land MediaLTD paid out a disturbingly high 398% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business. A useful secondary check can be to evaluate whether Central China Land MediaLTD generated enough free cash flow to afford its dividend. Fortunately, it paid out only 29% of its free cash flow in the past year.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Central China Land MediaLTD fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Click here to see how much of its profit Central China Land MediaLTD paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Central China Land MediaLTD's earnings per share have risen 12% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Central China Land MediaLTD has delivered 14% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

From a dividend perspective, should investors buy or avoid Central China Land MediaLTD? It's good to see earnings per share growing and low cashflow payout ratio, although we're uncomfortable with Central China Land MediaLTD's paying out such a high percentage of its profit. To summarise, Central China Land MediaLTD looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Central China Land MediaLTD is facing. Every company has risks, and we've spotted 2 warning signs for Central China Land MediaLTD (of which 1 is concerning!) you should know about.

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.

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