Jouder Precision Industry (Kunshan) (SZSE:300549) Has Announced That Its Dividend Will Be Reduced To CN¥0.10

Jouder Precision Industry (Kunshan) Co., Ltd. (SZSE:300549) has announced that on 7th of June, it will be paying a dividend ofCN¥0.10, which a reduction from last year's comparable dividend. This payment takes the dividend yield to 0.7%, which only provides a modest boost to overall returns.

View our latest analysis for Jouder Precision Industry (Kunshan)

Jouder Precision Industry (Kunshan) Doesn't Earn Enough To Cover Its Payments

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Jouder Precision Industry (Kunshan)'s dividend was higher than its profits, but the free cash flows quite comfortably covered it. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

If the company can't turn things around, EPS could fall by 24.4% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 165%, which is definitely a bit high to be sustainable going forward.

Jouder Precision Industry (Kunshan)'s Dividend Has Lacked Consistency

Looking back, Jouder Precision Industry (Kunshan)'s dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The payments haven't really changed that much since 7 years ago. 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

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Earnings per share has been sinking by 24% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Jouder Precision Industry (Kunshan)'s Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 5 warning signs for Jouder Precision Industry (Kunshan) you should be aware of, and 2 of them make us uncomfortable. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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