It looks like Shenzhen Kingsun Science & Technology Co.,Ltd (SZSE:300235) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Accordingly, Shenzhen Kingsun Science & TechnologyLtd investors that purchase the stock on or after the 10th of May will not receive the dividend, which will be paid on the 10th of May.

The company's next dividend payment will be CN¥0.050197 per share, and in the last 12 months, the company paid a total of CN¥0.05 per share. Last year's total dividend payments show that Shenzhen Kingsun Science & TechnologyLtd has a trailing yield of 0.5% on the current share price of CN¥9.19. If you buy this business for its dividend, you should have an idea of whether Shenzhen Kingsun Science & TechnologyLtd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Shenzhen Kingsun Science & TechnologyLtd paying out a modest 42% of its earnings. 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 17% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Shenzhen Kingsun Science & TechnologyLtd 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. That's why it's comforting to see Shenzhen Kingsun Science & TechnologyLtd's earnings have been skyrocketing, up 21% per annum for the past five years. Shenzhen Kingsun Science & TechnologyLtd is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Shenzhen Kingsun Science & TechnologyLtd has delivered 8.5% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Has Shenzhen Kingsun Science & TechnologyLtd got what it takes to maintain its dividend payments? Shenzhen Kingsun Science & TechnologyLtd has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Shenzhen Kingsun Science & TechnologyLtd looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Shenzhen Kingsun Science & TechnologyLtd for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 2 warning signs with Shenzhen Kingsun Science & TechnologyLtd and understanding them should be part of your investment process.

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.