China Resources Land Limited (HKG:1109) Stock Goes Ex-Dividend In Just Four Days

Readers hoping to buy China Resources Land Limited (HKG:1109) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase China Resources Land's shares before the 15th of June to receive the dividend, which will be paid on the 3rd of August.

The company's next dividend payment will be CN¥0.966 per share. Last year, in total, the company distributed CN¥1.17 to shareholders. Based on the last year's worth of payments, China Resources Land has a trailing yield of 3.7% on the current stock price of HK$35.98. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. China Resources Land paid out a comfortable 33% of its profit last year. 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. It paid out 25% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that China Resources Land'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.

Check out our latest analysis for China Resources Land

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that China Resources Land's earnings are down 3.1% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. China Resources Land has delivered an average of 9.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is China Resources Land worth buying for its dividend? China Resources Land 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. To summarise, China Resources Land looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while China Resources Land has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for China Resources Land and you should be aware of it before buying any shares.

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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.