Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Shanghai Fudan-Zhangjiang Bio-Pharmaceutical Co., Ltd. (HKG:1349) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 2nd of April in order to receive the dividend, which the company will pay on the 21st of August.

Shanghai Fudan-Zhangjiang Bio-Pharmaceutical's next dividend payment will be HK$0.07 per share. Last year, in total, the company distributed HK$0.07 to shareholders. Calculating the last year's worth of payments shows that Shanghai Fudan-Zhangjiang Bio-Pharmaceutical has a trailing yield of 1.6% on the current share price of HK$4.85. If you buy this business for its dividend, you should have an idea of whether Shanghai Fudan-Zhangjiang Bio-Pharmaceutical's dividend is reliable and sustainable. As a result, readers should always check whether Shanghai Fudan-Zhangjiang Bio-Pharmaceutical has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Shanghai Fudan-Zhangjiang Bio-Pharmaceutical

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Shanghai Fudan-Zhangjiang Bio-Pharmaceutical's payout ratio is modest, at just 28% of profit. A useful secondary check can be to evaluate whether Shanghai Fudan-Zhangjiang Bio-Pharmaceutical generated enough free cash flow to afford its dividend. It distributed 31% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Shanghai Fudan-Zhangjiang Bio-Pharmaceutical'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.

Click here to see how much of its profit Shanghai Fudan-Zhangjiang Bio-Pharmaceutical paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Shanghai Fudan-Zhangjiang Bio-Pharmaceutical's earnings per share have been growing at 14% a year for the past five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.