Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Northern United Publishing & Media (Group) Company Limited (SHSE:601999) is about to trade ex-dividend in the next 3 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. 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. Thus, you can purchase Northern United Publishing & Media (Group)'s shares before the 16th of August in order to receive the dividend, which the company will pay on the 16th of August.

The company's next dividend payment will be CN¥0.062 per share, and in the last 12 months, the company paid a total of CN¥0.062 per share. Looking at the last 12 months of distributions, Northern United Publishing & Media (Group) has a trailing yield of approximately 1.2% on its current stock price of CN¥5.34. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Northern United Publishing & Media (Group) can afford its dividend, and if the dividend could grow.

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. That's why it's good to see Northern United Publishing & Media (Group) paying out a modest 37% of its earnings. A useful secondary check can be to evaluate whether Northern United Publishing & Media (Group) generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 21% of its cash flow last year.

It's positive to see that Northern United Publishing & Media (Group)'s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Northern United Publishing & Media (Group) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Northern United Publishing & Media (Group)'s earnings per share have dropped 9.2% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Northern United Publishing & Media (Group) has delivered 4.7% dividend growth per year on average over the past 10 years.

Final Takeaway

Should investors buy Northern United Publishing & Media (Group) for the upcoming dividend? Northern United Publishing & Media (Group) has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's hard to get excited about Northern United Publishing & Media (Group) from a dividend perspective.

On that note, you'll want to research what risks Northern United Publishing & Media (Group) is facing. For example, we've found 3 warning signs for Northern United Publishing & Media (Group) (1 makes us a bit uncomfortable!) that deserve your attention before investing in the shares.

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.