Qingdao Hiron Commercial Cold Chain Co., Ltd. (SHSE:603187) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Qingdao Hiron Commercial Cold Chain's shares before the 13th of May in order to be eligible for the dividend, which will be paid on the 13th of May.

The company's next dividend payment will be CN¥0.55 per share, on the back of last year when the company paid a total of CN¥0.55 to shareholders. Looking at the last 12 months of distributions, Qingdao Hiron Commercial Cold Chain has a trailing yield of approximately 3.7% on its current stock price of CN¥15.01. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Qingdao Hiron Commercial Cold Chain paid out 51% of its earnings to investors last year, a normal payout level for most businesses. 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. It paid out 25% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Qingdao Hiron Commercial Cold Chain'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 the company's payout ratio, plus analyst estimates of its future dividends.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Qingdao Hiron Commercial Cold Chain's earnings per share have been growing at 13% a year for the past five years. Qingdao Hiron Commercial Cold Chain has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Qingdao Hiron Commercial Cold Chain has delivered 29% dividend growth per year on average over the past five years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is Qingdao Hiron Commercial Cold Chain an attractive dividend stock, or better left on the shelf? We like Qingdao Hiron Commercial Cold Chain's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Qingdao Hiron Commercial Cold Chain looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Qingdao Hiron Commercial Cold Chain has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Qingdao Hiron Commercial Cold Chain that we recommend you consider before investing in the business.

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.