Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618) is about to go ex-dividend in just four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Chongqing Rural Commercial Bank's shares before the 30th of May in order to receive the dividend, which the company will pay on the 8th of July.

The company's next dividend payment will be CN¥0.25 per share, on the back of last year when the company paid a total of CN¥0.25 to shareholders. Looking at the last 12 months of distributions, Chongqing Rural Commercial Bank has a trailing yield of approximately 9.7% on its current stock price of HK$3.06. If you buy this business for its dividend, you should have an idea of whether Chongqing Rural Commercial Bank's dividend is reliable and sustainable. As a result, readers should always check whether Chongqing Rural Commercial Bank has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Chongqing Rural Commercial Bank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Chongqing Rural Commercial Bank paid out a comfortable 29% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. 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 explains why we're not overly excited about Chongqing Rural Commercial Bank's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Chongqing Rural Commercial Bank also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Chongqing Rural Commercial Bank has increased its dividend at approximately 6.1% a year on average.

To Sum It Up

Is Chongqing Rural Commercial Bank worth buying for its dividend? Earnings per share have been flat in recent years, although Chongqing Rural Commercial Bank reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Chongqing Rural Commercial Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Wondering what the future holds for Chongqing Rural Commercial Bank? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.