Income Investors Should Know That Rizhao Port Jurong Co., Ltd. (HKG:6117) Goes Ex-Dividend Soon

It looks like Rizhao Port Jurong Co., Ltd. (HKG:6117) is about to go ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. Therefore, if you purchase Rizhao Port Jurong's shares on or after the 22nd of May, you won't be eligible to receive the dividend, when it is paid on the 31st of July.

The company's next dividend payment will be CN¥0.03 per share, on the back of last year when the company paid a total of CN¥0.03 to shareholders. Based on the last year's worth of payments, Rizhao Port Jurong stock has a trailing yield of around 4.9% on the current share price of HK$0.70. If you buy this business for its dividend, you should have an idea of whether Rizhao Port Jurong's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Fortunately Rizhao Port Jurong's payout ratio is modest, at just 29% of profit. 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. Dividends consumed 54% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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.

See our latest analysis for Rizhao Port Jurong

Click here to see how much of its profit Rizhao Port Jurong paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Rizhao Port Jurong earnings per share are up 2.5% per annum over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, six years ago, Rizhao Port Jurong has lifted its dividend by approximately 3.8% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is Rizhao Port Jurong an attractive dividend stock, or better left on the shelf? Earnings per share growth has been modest, and it's interesting that Rizhao Port Jurong is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. 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.

On that note, you'll want to research what risks Rizhao Port Jurong is facing. Case in point: We've spotted 1 warning sign for Rizhao Port Jurong you should be aware of.

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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.