It looks like Hangzhou Xili Intelligent Technology Co.,Ltd (SHSE:688616) is about to go ex-dividend in the next 2 days. 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 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, Hangzhou Xili Intelligent TechnologyLtd investors that purchase the stock on or after the 3rd of July will not receive the dividend, which will be paid on the 3rd of July.

The company's upcoming dividend is CN¥0.30 a share, following on from the last 12 months, when the company distributed a total of CN¥0.30 per share to shareholders. Based on the last year's worth of payments, Hangzhou Xili Intelligent TechnologyLtd stock has a trailing yield of around 2.6% on the current share price of CN¥11.34. If you buy this business for its dividend, you should have an idea of whether Hangzhou Xili Intelligent TechnologyLtd's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hangzhou Xili Intelligent TechnologyLtd paid out more than half (52%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year it paid out 58% of its free cash flow as dividends, within the usual range for most companies.

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 Hangzhou Xili Intelligent 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Hangzhou Xili Intelligent TechnologyLtd's earnings per share have risen 18% per annum over the last five years. Hangzhou Xili Intelligent TechnologyLtd is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past three years, Hangzhou Xili Intelligent TechnologyLtd has increased its dividend at approximately 11% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has Hangzhou Xili Intelligent TechnologyLtd got what it takes to maintain its dividend payments? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Hangzhou Xili Intelligent TechnologyLtd's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 52% and 58% respectively. In summary, it's hard to get excited about Hangzhou Xili Intelligent TechnologyLtd from a dividend perspective.

While it's tempting to invest in Hangzhou Xili Intelligent TechnologyLtd for the dividends alone, you should always be mindful of the risks involved. For example - Hangzhou Xili Intelligent TechnologyLtd has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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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