Readers hoping to buy Anhui Jiuhuashan Tourism Development Co., Ltd. (SHSE:603199) 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 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. This means that investors who purchase Anhui Jiuhuashan Tourism Development's shares on or after the 6th of June will not receive the dividend, which will be paid on the 6th of June.

The company's upcoming dividend is CN¥0.79 a share, following on from the last 12 months, when the company distributed a total of CN¥0.79 per share to shareholders. Calculating the last year's worth of payments shows that Anhui Jiuhuashan Tourism Development has a trailing yield of 2.2% on the current share price of CN¥35.32. If you buy this business for its dividend, you should have an idea of whether Anhui Jiuhuashan Tourism Development'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 out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Anhui Jiuhuashan Tourism Development paid out 53% of its earnings to investors last year, a normal payout level for most businesses.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. Fortunately for readers, Anhui Jiuhuashan Tourism Development's earnings per share have been growing at 12% a year for the past five years. Anhui Jiuhuashan Tourism Development is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of 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. Anhui Jiuhuashan Tourism Development has delivered an average of 23% per year annual increase in its dividend, based on the past nine years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Has Anhui Jiuhuashan Tourism Development got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Anhui Jiuhuashan Tourism Development is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Anhui Jiuhuashan Tourism Development more closely.

So while Anhui Jiuhuashan Tourism Development looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Anhui Jiuhuashan Tourism Development and understanding them should be part of your investment process.

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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.