It looks like 37 Interactive Entertainment Network Technology Group Co., Ltd. (SZSE:002555) is about to go ex-dividend in the next two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, 37 Interactive Entertainment Network Technology Group investors that purchase the stock on or after the 27th of May will not receive the dividend, which will be paid on the 27th of May.

The company's next dividend payment will be CN¥0.37 per share, on the back of last year when the company paid a total of CN¥0.52 to shareholders. Calculating the last year's worth of payments shows that 37 Interactive Entertainment Network Technology Group has a trailing yield of 2.4% on the current share price of CN¥21.5. If you buy this business for its dividend, you should have an idea of whether 37 Interactive Entertainment Network Technology Group's dividend is reliable and sustainable. As a result, readers should always check whether 37 Interactive Entertainment Network Technology Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for 37 Interactive Entertainment Network Technology Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. 37 Interactive Entertainment Network Technology Group paid out a comfortable 32% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 24% of its free cash flow in the last year.

It's positive to see that 37 Interactive Entertainment Network Technology Group'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 the company's payout ratio, plus analyst estimates of its future dividends.

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. That's why it's comforting to see 37 Interactive Entertainment Network Technology Group's earnings have been skyrocketing, up 26% per annum for the past five years. 37 Interactive Entertainment Network Technology Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, 37 Interactive Entertainment Network Technology Group has lifted its dividend by approximately 40% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is 37 Interactive Entertainment Network Technology Group worth buying for its dividend? 37 Interactive Entertainment Network Technology Group has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

So while 37 Interactive Entertainment Network Technology Group looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for 37 Interactive Entertainment Network Technology Group that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.