Zhejiang Yasha DecorationLtd (SZSE:002375) Is Increasing Its Dividend To CN¥0.02

Zhejiang Yasha Decoration Co.,Ltd (SZSE:002375) has announced that it will be increasing its dividend from last year's comparable payment on the 12th of July to CN¥0.02. This takes the annual payment to 0.6% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for Zhejiang Yasha DecorationLtd

Zhejiang Yasha DecorationLtd's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Zhejiang Yasha DecorationLtd was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, EPS could fall by 7.6% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 9.9%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of CN¥0.0666 in 2014 to the most recent total annual payment of CN¥0.02. The dividend has fallen 70% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Come By

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. In the last five years, Zhejiang Yasha DecorationLtd's earnings per share has shrunk at approximately 7.6% per annum. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Our Thoughts On Zhejiang Yasha DecorationLtd's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Zhejiang Yasha DecorationLtd's payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Zhejiang Yasha DecorationLtd that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.

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