Dividend Investors: Don’t Be Too Quick to Buy Anhui Kouzi Distillery Co., Ltd. (SHSE:603589) for the Upcoming Dividend

Anhui Kouzi Distillery’s Dividend Details and OutlookAnhui Kouzi Distillery’s Dividend Details and Outlook Anhui Kouzi Distillery Co., Ltd. is set to go ex-dividend in three days, with an ex-dividend date of July 4, 2024. This means that any stock purchases made on or after this date will not qualify for the dividend payment of CN¥1.50 per share to be paid on July 4. Dividend Yield and Payout Ratio Based on the last year’s dividend payments, Anhui Kouzi Distillery has a rolling yield of around 3.8% on its current share price of CN¥39.19. The company has a payout ratio of 51%, indicating that it distributes approximately half of its profits to shareholders. Dividend Affordability While Anhui Kouzi Distillery has paid out a reasonable percentage of its earnings as dividends, it has paid out a high 115% of its free cash flow. This suggests that the company may need to carefully manage its cash flow to sustain its dividend payments. Dividend Growth The company’s earnings per share have grown at a modest rate of 3.0% annually over the past five years. Additionally, Anhui Kouzi Distillery has increased its dividend by an average of 20% per year over the past eight years. This combination of earnings and dividend growth is encouraging. Overall Dividend Outlook Anhui Kouzi Distillery’s dividend appears to be somewhat sustainable, as it is covered by a reasonable percentage of its earnings. However, the high payout ratio of free cash flow raises some concerns regarding the long-term sustainability of the dividend. Investors should monitor the company’s future cash flow generation and dividend payout ratio to assess the potential impact on its dividend payments.

It resembles Anhui Kouzi Distillery Co., Ltd. (SHSE:603589) will go ex-dividend in the next three days. The ex-dividend date is one business day before a company’s record date, the date on which the company determines which shareholders are entitled to dividends. The ex-dividend date is an important date to pay attention to, as any purchase of the shares on or after this date may result in a late settlement that will not be reflected on the record date. Accordingly, Anhui Kouzi Distillery investors who purchase the shares on or after July 4 will not receive the dividend, which will be paid on July 4.

The company’s next dividend payment will be CN¥1.50 per share. Last year, the company distributed a total of CN¥1.50 to shareholders. Based on the last year’s worth of payments, Anhui Kouzi Distillery stock has a rolling yield of around 3.8% on the current share price of CN¥39.19. Dividends are an important source of income for many shareholders, but the health of the company is crucial to maintaining those dividends. So we need to investigate whether Anhui Kouzi Distillery can afford its dividend, and if the dividend can grow.

View our latest analysis for Anhui Kouzi Distillery

Dividends are usually paid from company profits. If a company pays more in dividends than it earned in profits, the dividend may be unsustainable. Anhui Kouzi Distillery paid out 51% of its profits to investors last year, a normal payout level for most companies. A useful secondary check could be to evaluate whether Anhui Kouzi Distillery generated enough free cash flow to afford its dividend. Over the past year, the company paid out 115% of its free cash flow as dividends, which is uncomfortably high. We’re curious why the company paid out more cash than last year, as this could be one of the first signs that a dividend may be unsustainable.

Anhui Kouzi Distillery paid out less in dividends than it reported in profit, but unfortunately it did not generate enough cash to cover the dividend. If this were to happen repeatedly, it would pose a risk to Anhui Kouzi Distillery’s ability to maintain its dividend.

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

SHSE:603589 Historical Dividend June 30, 2024

Have profits and dividends increased?

Companies with strong growth prospects tend to be the best dividend payers, because it’s easier to grow dividends when earnings per share improve. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s a relief to see that Anhui Kouzi Distillery’s earnings per share have grown 3.0% per year over the past five years. Earnings have risen somewhat, but we’re concerned that dividend payments have eaten up most of the company’s cash flow over the past year.

The primary way most investors assess a company’s dividend prospects is to check its historical dividend growth. Over the past eight years, Anhui Kouzi Distillery has increased its dividend by an average of around 20% per year. We’re happy to see dividends increasing alongside earnings over the years, which could be a sign that the company intends to share the growth with shareholders.

It comes down to

Is Anhui Kouzi Distillery worth buying for its dividend? Anhui Kouzi Distillery pays out a reasonable percentage of its earnings and an uncomfortably high 115% of its cash flow as dividends. At least earnings per share have been growing steadily. It’s not that we think Anhui Kouzi Distillery is a bad company, but these characteristics generally don’t translate to great dividend performance.

That said, if you’re looking at this stock without much concern for the dividend, you should still be familiar with the risks associated with Anhui Kouzi Distillery. Example: We’ve seen it 1 warning sign for Anhui Kouzi Distillery what you should be aware of.

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Valuation is complex, but we help make it simple.

Find out whether Anhui Kouzi Distillery may be over or undervalued by exploring our comprehensive analysis, including: fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article from Simply Wall St is of a general nature. We comment solely on historical data and analyst forecasts, using an objective methodology. Our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or financial situation. We aim to provide you with focused long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in the shares mentioned.

Valuation is complex, but we make it simple.

Find out whether Anhui Kouzi Distillery may be over or undervalued by checking out our comprehensive analysis, including: fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the free analysis

Do you have feedback on this article? Are you concerned about the content? Please contact us immediately. You can also send an email to [email protected]