China Cinda Asset Management Co., Ltd. (HKG:1359) is set to go ex-dividend and yield 8.4%

China Cinda Asset Management Co., Ltd. (HKG:1359) is set to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company’s record date, which is the date the company determines which shareholders are entitled to receive a dividend. It is important to know the ex-dividend date, because any trade in the stock must have settled on or before the record date. Therefore, if you buy shares of China Cinda Asset Management on or after June 30, you will not be eligible to receive the dividend when it is paid on January 1.

The company’s next dividend payment will be CN¥0.095 per share. Last year, in total, the company distributed CN¥0.095 to shareholders. Looking at the last 12 months of distributions, China Cinda Asset Management has a rolling yield of around 8.4% on its current price of HK$1.32. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! We therefore need to check whether dividend payments are covered and whether profits are increasing.

Check out our latest analysis for China Cinda Asset Management

Dividends are usually paid out of company profits. If a company pays more in dividends than it earns in profits, then the dividend could be unsustainable. That’s why it’s good to see China Cinda Asset Management paying out a modest 33% of its earnings.

When a company has paid out less in dividends than it has earned in profits, this generally suggests that its dividend is affordable. The lower the percentage of its profits it pays out, the greater the margin of safety for the dividend if the company goes into a recession.

Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

SEHK: 1359 Historic dividend June 26, 2022

Have earnings and dividends increased?

Companies with declining profits are tricky from a dividend perspective. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. Readers will then understand why we are concerned that China Cinda Asset Management’s earnings per share have fallen 7.5% annually over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid out shrinks.

Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. China Cinda Asset Management has seen its dividend drop by 0.5% per year on average over the past seven years, which is not encouraging.

Last takeaway

Did China Cinda Asset Management get what it needed to sustain its dividend payments? China Cinda Asset Management’s earnings per share have been declining over the past five years, despite benefiting from a low payout ratio, which suggests a dividend cut is relatively unlikely. It doesn’t seem like an exceptional opportunity, but it might be worth a closer look.

If you want to learn more about China Cinda Asset Management, it is useful to know the risks this company faces. To help you, we found 2 warning signs for China Cinda Asset Management (1 should not be ignored!) which you should be aware of before buying the shares.

As a general rule, we don’t recommend simply buying the first dividend-paying stock you see. Here is a curated list of attractive stocks that are strong dividend payers.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.