Why You Might Be Interested In Auntea Jenny (Shanghai) Industrial Co., Ltd. (HKG:2589) For Its Upcoming Dividend

Auntea Jenny (Shanghai) Industrial Co., Ltd. (HKG:2589) stock is about to trade ex-dividend in 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Auntea Jenny (Shanghai) Industrial's shares on or after the 26th of June will not receive the dividend, which will be paid on the 5th of August.

The company's next dividend payment will be CN¥1.00 per share, and in the last 12 months, the company paid a total of CN¥1.30 per share. Based on the last year's worth of payments, Auntea Jenny (Shanghai) Industrial has a trailing yield of 1.6% on the current stock price of HK$141.00. If you buy this business for its dividend, you should have an idea of whether Auntea Jenny (Shanghai) Industrial's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Auntea Jenny (Shanghai) Industrial paying out a modest 35% of its earnings.

Check out our latest analysis for Auntea Jenny (Shanghai) Industrial

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Auntea Jenny (Shanghai) Industrial has grown its earnings rapidly, up 24% a year for the past three years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Unfortunately Auntea Jenny (Shanghai) Industrial has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Has Auntea Jenny (Shanghai) Industrial got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Auntea Jenny (Shanghai) Industrial appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Auntea Jenny (Shanghai) Industrial has 1 warning sign we think 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.

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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.