Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Shenzhen Jdd Tech New Material Co., Ltd (SZSE:301538) is about to go ex-dividend in just three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. In other words, investors can purchase Shenzhen Jdd Tech New Material's shares before the 10th of October in order to be eligible for the dividend, which will be paid on the 10th of October.
The company's next dividend payment will be CN¥0.20 per share. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Shenzhen Jdd Tech New Material has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Shenzhen Jdd Tech New Material is paying out just 19% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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.
Click here to see how much of its profit Shenzhen Jdd Tech New Material paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Shenzhen Jdd Tech New Material's earnings per share have been growing at 17% a year for the past five years.
We'd also point out that Shenzhen Jdd Tech New Material issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
This is Shenzhen Jdd Tech New Material's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.
The Bottom Line
Is Shenzhen Jdd Tech New Material worth buying for its dividend? We like that Shenzhen Jdd Tech New Material has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall, it's hard to get excited about Shenzhen Jdd Tech New Material from a dividend perspective.
So while Shenzhen Jdd Tech New Material looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for Shenzhen Jdd Tech New Material (1 is a bit unpleasant!) that deserve your attention before investing in the shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
