Readers hoping to buy Ningbo Fubang Jingye Group Co.,Ltd (SHSE:600768) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Ningbo Fubang Jingye GroupLtd investors that purchase the stock on or after the 9th of January will not receive the dividend, which will be paid on the 9th of January.

The company's next dividend payment will be CN¥0.10 per share. If you buy this business for its dividend, you should have an idea of whether Ningbo Fubang Jingye GroupLtd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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. Ningbo Fubang Jingye GroupLtd distributed an unsustainably high 124% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious.

Click here to see how much of its profit Ningbo Fubang Jingye GroupLtd 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Ningbo Fubang Jingye GroupLtd, with earnings per share up 7.3% on average over the last five years.

This is Ningbo Fubang Jingye GroupLtd's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

Has Ningbo Fubang Jingye GroupLtd got what it takes to maintain its dividend payments? Ningbo Fubang Jingye GroupLtd has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. We're unconvinced on the company's merits, and think there might be better opportunities out there.

So if you want to do more digging on Ningbo Fubang Jingye GroupLtd, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 3 warning signs for Ningbo Fubang Jingye GroupLtd (1 can't be ignored!) that deserve your attention before investing in the shares.

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.