Sanjiang Shopping Club Co.,Ltd (SHSE:601116) is about to trade ex-dividend in the next 4 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. Thus, you can purchase Sanjiang Shopping ClubLtd’s shares before the 11th of June in order to receive the dividend, which the company will pay on the 11th of June.
The company’s upcoming dividend is CN¥0.20 a share, following on from the last 12 months, when the company distributed a total of CN¥0.20 per share to shareholders. Looking at the last 12 months of distributions, Sanjiang Shopping ClubLtd has a trailing yield of approximately 2.5% on its current stock price of CN¥8.10. If you buy this business for its dividend, you should have an idea of whether Sanjiang Shopping ClubLtd’s dividend is reliable and sustainable. As a result, readers should always check whether Sanjiang Shopping ClubLtd has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Sanjiang Shopping ClubLtd
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. It paid out 80% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We’d be worried about the risk of a drop in earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 57% of its free cash flow as dividends, within the usual range for most companies.
It’s positive to see that Sanjiang Shopping ClubLtd’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 how much of its profit Sanjiang Shopping ClubLtd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It’s not encouraging to see that Sanjiang Shopping ClubLtd’s earnings are effectively flat over the past five years. It’s better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. A high payout ratio of 80% generally happens when a company can’t find better uses for the cash. Combined with slim earnings growth in the past few years, Sanjiang Shopping ClubLtd could be signalling that its future growth prospects are thin.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. It looks like the Sanjiang Shopping ClubLtd dividends are largely the same as they were 10 years ago.
To Sum It Up
Is Sanjiang Shopping ClubLtd an attractive dividend stock, or better left on the shelf? Sanjiang Shopping ClubLtd has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don’t appear unsustainable. In summary, while it has some positive characteristics, we’re not inclined to race out and buy Sanjiang Shopping ClubLtd today.
So if you want to do more digging on Sanjiang Shopping ClubLtd, you’ll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for Sanjiang Shopping ClubLtd and you should be aware of it before buying any 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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Find out whether Sanjiang Shopping ClubLtd 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.