Readers hoping to buy State power Rixin Technology Co., Ltd. (SZSE:301162) to get its dividends will need to act soon, as the shares are about to trade ex-dividend. The ex-dividend date occurs one day before the record date, which is the day shareholders need to be registered with the company to receive a dividend. The ex-dividend date is important because any transaction on a stock must have been settled before the record date to be eligible for a dividend. In other words, investors can purchase State Power Rixin Technology shares before May 17th to be entitled to the dividend, which will be paid on May 17th.
The company’s next dividend payment will be CN¥0.45 per share, following last year when the company paid a total of CN¥0.45 to shareholders. Last year’s total dividend payments show that State Power Rixin Technology has a trailing yield of 1.0% on the current share price of CN¥47.07. If you buy this business for its dividend, you should have an idea of whether State Power Rixin Technology’s dividends are reliable and sustainable. So we need to investigate whether State Power Rixin Technology can pay its dividend and if the dividend could grow.
Check out our latest analysis for State Power Rixin Technology
Dividends are typically paid out of the company’s profits. If a company pays more in dividends than it made in profit, then the dividend may be unsustainable. State Power Rixin Technology paid out more than half (53%) of its profits last year, which is a regular payout rate for most companies. A useful secondary check might be to assess whether State Power Rixin Technology generated enough free cash flow to pay its dividend. State Power Rixin Technology paid out more free cash flow than it generated – 139%, to be precise – last year, which we consider worryingly high. We’re curious why the company paid out more cash than it generated last year, as this could be one of the first signs that a dividend might be unsustainable.
State Power Rixin Technology has a large net cash position on the balance sheet, which could fund large dividends for a while if the company so desired. Still, smart investors know it’s best to evaluate dividends in relation to the cash and profit generated by the business. Paying cash dividends on the balance sheet is not sustainable in the long term.
Although State Power Rixin Technology’s dividends were covered by the company’s reported profits, cash is a bit more important, so it’s not good to see that the company didn’t generate enough cash to pay its dividend. If this happened repeatedly, it would be a risk to State Power Rixin Technology’s ability to maintain its dividend.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have earnings and dividends increased?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they often find it easier to grow dividends per share. If profits decline and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s reassuring to see that State Power Rixin Technology’s earnings have soared, increasing 25% annually over the past five years. Earnings have been growing quickly, but we’re concerned that dividend payments have consumed most of the company’s cash flow over the past year.
Many investors will evaluate a company’s dividend performance by evaluating how much the dividend payments have changed over time. State Power Rixin Technology has provided an average annual increase of 18% per year in its dividend, based on the last two years of dividend payments. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing along with it.
In short
Does State Power Rixin Technology have what it takes to keep paying dividends? EPS growth is positive and the company’s payout ratio appears normal. However, we note that State Power Rixin Technology paid out a much higher percentage of its free cash flow, which makes us uncomfortable. In short, State Power Rixin Technology looks good in this analysis, although it doesn’t seem like a notable opportunity.
However, if you are still interested in State Power Rixin technology as a potential investment, you should definitely consider some of the risks involved with State Power Rixin technology. To help with this, we discovered 3 Warning Signs for State Power Rixin Technology that you should know before investing in its shares.
If you’re looking for big dividend payers, we recommend Checking out our selection of top dividend stocks.
Assessment is complex, but we are helping to make it simple.
Find out if State Power Rixin Technology is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and caveats, dividends, insider transactions and financial health.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your objectives or financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St has no position in any of the stocks mentioned.
