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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sihuan Pharmaceutical Holdings Group Ltd. (HKG:460) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 17th of October in order to receive the dividend, which the company will pay on the 30th of October.
Sihuan Pharmaceutical Holdings Group's upcoming dividend is HK$0.004 a share, following on from the last 12 months, when the company distributed a total of HK$0.02 per share to shareholders. Looking at the last 12 months of distributions, Sihuan Pharmaceutical Holdings Group has a trailing yield of approximately 1.7% on its current stock price of HK$1.13. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Sihuan Pharmaceutical Holdings Group has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Sihuan Pharmaceutical Holdings Group
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. Sihuan Pharmaceutical Holdings Group paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Sihuan Pharmaceutical Holdings Group didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. The good news is it paid out just 12% of its free cash flow in the last year.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Sihuan Pharmaceutical Holdings Group was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sihuan Pharmaceutical Holdings Group's dividend payments per share have declined at 1.4% per year on average over the past eight years, which is uninspiring.