Jinhong Fashion Group Co.,Ltd. (SHSE:603518) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Jinhong Fashion GroupLtd investors that purchase the stock on or after the 10th of July will not receive the dividend, which will be paid on the 10th of July.
The company’s next dividend payment will be CN¥0.26 per share, and in the last 12 months, the company paid a total of CN¥0.26 per share. Based on the last year’s worth of payments, Jinhong Fashion GroupLtd stock has a trailing yield of around 3.1% on the current share price of CN¥8.51. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it’s growing.
See our latest analysis for Jinhong Fashion GroupLtd
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Jinhong Fashion GroupLtd paid out a comfortable 29% of its profit last year. 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. What’s good is that dividends were well covered by free cash flow, with the company paying out 12% of its cash flow last year.
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 the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. That’s why it’s not ideal to see Jinhong Fashion GroupLtd’s earnings per share have been shrinking at 4.5% a year over the previous five years.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past nine years, Jinhong Fashion GroupLtd has increased its dividend at approximately 10% a year on average.
To Sum It Up
From a dividend perspective, should investors buy or avoid Jinhong Fashion GroupLtd? Jinhong Fashion GroupLtd has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re not all that optimistic on its dividend prospects.
So while Jinhong Fashion GroupLtd looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. Case in point: We’ve spotted 1 warning sign for Jinhong Fashion GroupLtd you should be aware of.
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.
Valuation is complex, but we’re helping make it simple.
Find out whether Jinhong Fashion GroupLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
Valuation is complex, but we’re helping make it simple.
Find out whether Jinhong Fashion GroupLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com