It looks like JiaoZuo WanFang Aluminum Manufacturing Co., Ltd (SZSE:000612) is about to go ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase JiaoZuo WanFang Aluminum Manufacturing's shares before the 19th of June in order to receive the dividend, which the company will pay on the 19th of June.

The company's upcoming dividend is CN¥0.14 a share, following on from the last 12 months, when the company distributed a total of CN¥0.14 per share to shareholders. Last year's total dividend payments show that JiaoZuo WanFang Aluminum Manufacturing has a trailing yield of 2.0% on the current share price of CN¥6.89. If you buy this business for its dividend, you should have an idea of whether JiaoZuo WanFang Aluminum Manufacturing's dividend is reliable and sustainable. As a result, readers should always check whether JiaoZuo WanFang Aluminum Manufacturing has been able to grow its dividends, or if the dividend might be cut.

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. JiaoZuo WanFang Aluminum Manufacturing has a low and conservative payout ratio of just 24% of its income after tax. 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. The good news is it paid out just 9.3% of its free cash flow in the 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 JiaoZuo WanFang Aluminum Manufacturing 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 JiaoZuo WanFang Aluminum Manufacturing's earnings have been skyrocketing, up 30% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, JiaoZuo WanFang Aluminum Manufacturing looks like a promising growth company.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. JiaoZuo WanFang Aluminum Manufacturing's dividend payments are effectively flat on where they were 10 years ago.

To Sum It Up

Is JiaoZuo WanFang Aluminum Manufacturing worth buying for its dividend? JiaoZuo WanFang Aluminum Manufacturing 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. There's a lot to like about JiaoZuo WanFang Aluminum Manufacturing, and we would prioritise taking a closer look at it.

So while JiaoZuo WanFang Aluminum Manufacturing looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 2 warning signs for JiaoZuo WanFang Aluminum Manufacturing and you should be aware of these before buying any shares.

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.

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