Readers looking to buy Luolai Lifestyle Technology Co., Ltd. (SZSE:002293) for its dividend will need to act soon, as the stock is about to trade ex-dividend. . The ex-dividend date is one day before the record date. The record date is the date on which a shareholder must appear on the company’s books in order to receive the dividend. It is important to be aware of the ex-dividend date, as stock trades must be settled on or before the record date. This means that investors who purchased Luorai Lifestyle Technology shares after October 11th will not receive the dividends paid on October 11th.
The company’s next dividend payment will be RMB0.20 per share, following last year’s total payment of RMB0.40 to shareholders. Based on the last year’s worth of payments, Luorai Lifestyle Technology has a current yield of 5.1% on the current stock price of CN7.80. Dividends can be a significant contributor to investment returns for long-term holders, but only if they continue to be paid. That’s why we should always check whether the dividend payments are sustainable, and if the company is growing.
Check out our latest analysis for Rarai Lifestyle Technology.
If a company pays out more in dividends than it earned in profit, then the dividend might become unsustainable – hardly an ideal situation. Last year, Luo Lai Life Science & Technology distributed 112% of its unsustainably high profits to shareholders as dividends. We believe that absent extenuating circumstances, the dividend could be reduced. A useful secondary check is to assess whether Luorai Lifestyle Technology generated enough free cash flow to pay its dividend. It paid out more than half (58%) of its free cash flow in the past year, which is within the average range for most companies.
It’s good to see that while Rarai Life Science Technology’s dividend is not covered by profits, it’s still affordable, at least from a cash perspective. Still, we would be concerned if a company repeatedly paid out more dividends than it earned. Few companies are able to consistently pay dividends that exceed their reported profits.
Click here to see the company’s payout ratio and analyst estimates of its future dividends.
SZSE:002293 Historical Dividend October 7, 2024
Are profits and dividends growing?
Companies whose profits are shrinking are difficult to view from a dividend perspective. If profits decline significantly, the company may be forced to cut its dividend. That’s why it’s not ideal that Rarai Life Science’s earnings per share have been shrinking at an annual rate of 3.9% over the past five years.
Many investors assess a company’s dividend performance by evaluating how much its dividend payments have changed over time. Luolai Lifestyle Technology has delivered an average annual dividend increase of 12%, based on the past 10 years of dividend payments. This is interesting, but combining a dividend increase despite a decline in profits can usually only be achieved by paying out a higher percentage of profits. Luolai Lifestyle Technology is already paying out 112% of its profit, but with its earnings shrinking, we think this dividend is unlikely to grow quickly in the future.
final point
Is Rarai Lifestyle Technology an attractive dividend stock, or is it better left on the shelf? Earnings per share are on the decline, which is not an encouraging situation. Furthermore, Luolai Lifestyle Technology is paying out a fairly high percentage of its revenue and more than half of its cash flow, so it’s difficult to assess whether the company is reinvesting enough into its business to improve its situation. Bottom line: Luolai Lifestyle Technology has some disappointing features that we think could lead to suboptimal results for dividend investors.
That said, even if you’re considering this stock without worrying too much about its dividend, you should be familiar with the risks associated with Rarai Life Science. Every company has risks, and we’ve spotted 1 warning sign for Luorai Lifestyle Technology you should be aware of.
If you’re interested in the market for high dividends, we recommend checking out our pick of the best dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
