Beijing Wandong Medical Technology Co.,Ltd. (SHSE:600055) stock is about to trade ex-dividend in three 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. In other words, investors can purchase Beijing Wandong Medical TechnologyLtd's shares before the 17th of May in order to be eligible for the dividend, which will be paid on the 17th of May.
The company's next dividend payment will be CN¥0.13 per share, and in the last 12 months, the company paid a total of CN¥0.13 per share. Looking at the last 12 months of distributions, Beijing Wandong Medical TechnologyLtd has a trailing yield of approximately 0.9% on its current stock price of CN¥15.20. If you buy this business for its dividend, you should have an idea of whether Beijing Wandong Medical TechnologyLtd's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Beijing Wandong Medical TechnologyLtd's payout ratio is modest, at just 48% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 57% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
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 Beijing Wandong Medical TechnologyLtd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Beijing Wandong Medical TechnologyLtd's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Beijing Wandong Medical TechnologyLtd has lifted its dividend by approximately 19% a year on average.
The Bottom Line
Has Beijing Wandong Medical TechnologyLtd got what it takes to maintain its dividend payments? Its earnings per share are effectively flat in recent times. The company paid out less than half its income and more than half its cash flow as dividends to shareholders. In summary, it's hard to get excited about Beijing Wandong Medical TechnologyLtd from a dividend perspective.
If you're not too concerned about Beijing Wandong Medical TechnologyLtd's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 2 warning signs with Beijing Wandong Medical TechnologyLtd and understanding them should be part of your investment process.
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.