Dividend Investors: Don’t Be Too Quick To Buy Anhui Kouzi Distillery Co., Ltd. (SHSE:603589) For Its Upcoming Dividend

Anhui Kouzi Distillery Co., Ltd. (SHSE:603589) is set to go ex-dividend in three days. The ex-dividend date is crucial as it determines which shareholders are eligible to receive a dividend. Investors purchasing the stock on or after July 4th will not receive the CN¥1.50 per share dividend, which will be paid on the same day.

Last year, the company distributed CN¥1.50 per share, resulting in a trailing yield of around 3.8% on the current share price of CN¥39.19. It is important to assess whether Anhui Kouzi Distillery can sustain its dividend and potential growth.

Anhui Kouzi Distillery paid out 51% of its earnings to investors last year, a normal payout level. However, it paid out 115% of its free cash flow as dividends, indicating potential unsustainability. While the company paid out less in dividends than its profits, it failed to generate enough cash to cover the dividend.

Despite growing earnings per share by 3.0% annually over the last five years, concerns arise as dividend payments consumed most of the company’s cash flow. Anhui Kouzi Distillery has increased its dividend by an average of 20% per year over the past eight years, reflecting a commitment to sharing growth with shareholders.

In conclusion, Anhui Kouzi Distillery’s dividend outlook is mixed. While it pays out a reasonable percentage of its income, the high cash flow payout raises concerns. It is essential for investors to be aware of the risks associated with the company.