Jiangnan Yifan MotorLtd (SZSE:301023) Will Pay A Dividend Of CN¥0.40

Jiangnan Yifan Motor Co.,Ltd (SZSE:301023) will pay a dividend of CN¥0.40 on the 23rd of September. This will take the dividend yield to an attractive 2.7%, providing a nice boost to shareholder returns.

See our latest analysis for Jiangnan Yifan MotorLtd

Estimates Indicate Jiangnan Yifan MotorLtd's Could Struggle to Maintain Dividend Payments In The Future

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Jiangnan Yifan MotorLtd's dividend was only 61% of earnings, however it was paying out 443% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

If the company can't turn things around, EPS could fall by 5.2% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 175%, which is definitely a bit high to be sustainable going forward.

Jiangnan Yifan MotorLtd's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 3 years was CN¥0.267 in 2021, and the most recent fiscal year payment was CN¥0.93. This implies that the company grew its distributions at a yearly rate of about 52% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth Is Doubtful

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 Jiangnan Yifan MotorLtd's EPS has declined at around 5.2% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Jiangnan Yifan MotorLtd's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Jiangnan Yifan MotorLtd will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 4 warning signs for Jiangnan Yifan MotorLtd (3 are potentially serious!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated 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.