Suzhou Gold Mantis Construction Decoration (SZSE:002081) Is Paying Out A Dividend Of CN¥0.10

Suzhou Gold Mantis Construction Decoration Co., Ltd. (SZSE:002081) has announced that it will pay a dividend of CN¥0.10 per share on the 6th of June. This payment means that the dividend yield will be 2.9%, which is around the industry average.

Check out our latest analysis for Suzhou Gold Mantis Construction Decoration

Suzhou Gold Mantis Construction Decoration's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Suzhou Gold Mantis Construction Decoration was paying only paying out a fraction of earnings, but the payment was a massive 2,222% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

The next year is set to see EPS grow by 23.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the dividend has gone from CN¥0.0889 total annually to CN¥0.10. This implies that the company grew its distributions at a yearly rate of about 1.2% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Dividend Growth Potential Is Shaky

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Suzhou Gold Mantis Construction Decoration's EPS has declined at around 15% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Suzhou Gold Mantis Construction Decoration's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Suzhou Gold Mantis Construction Decoration is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Suzhou Gold Mantis Construction Decoration that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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