It looks like BOC International (China) CO., LTD. (SHSE:601696) is about to go ex-dividend in the next two 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase BOC International (China)'s shares before the 19th of August in order to be eligible for the dividend, which will be paid on the 19th of August.

The company's next dividend payment will be CN¥0.034 per share, on the back of last year when the company paid a total of CN¥0.034 to shareholders. Calculating the last year's worth of payments shows that BOC International (China) has a trailing yield of 0.4% on the current share price of CN¥9.05. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether BOC International (China) has been able to grow its dividends, or if the dividend might be cut.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. BOC International (China) has a low and conservative payout ratio of just 11% of its income after tax.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit BOC International (China) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about BOC International (China)'s flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, four years ago, BOC International (China) has lifted its dividend by approximately 3.2% a year on average.

To Sum It Up

Should investors buy BOC International (China) for the upcoming dividend? Earnings per share have been flat in recent years, although BOC International (China) reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, BOC International (China) appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Curious about whether BOC International (China) has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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.