China Cinda Asset Management Co., Ltd. (HKG:1359) stock is about to trade ex-dividend in 3 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase China Cinda Asset Management's shares before the 28th of June in order to be eligible for the dividend, which will be paid on the 16th of August.
The company's upcoming dividend is CN¥0.04576 a share, following on from the last 12 months, when the company distributed a total of CN¥0.05 per share to shareholders. Based on the last year's worth of payments, China Cinda Asset Management stock has a trailing yield of around 6.8% on the current share price of HK$0.72. If you buy this business for its dividend, you should have an idea of whether China Cinda Asset Management's dividend is reliable and sustainable. As a result, readers should always check whether China Cinda Asset Management has been able to grow its dividends, or if the dividend might be cut.
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. China Cinda Asset Management paid out a comfortable 41% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by China Cinda Asset Management's 22% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. China Cinda Asset Management's dividend payments per share have declined at 8.2% per year on average over the past nine years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.
Final Takeaway
From a dividend perspective, should investors buy or avoid China Cinda Asset Management? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
So if you want to do more digging on China Cinda Asset Management, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 3 warning signs for China Cinda Asset Management (1 makes us a bit uncomfortable) you should be aware of.
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.
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