Orient Securities (SHSE:600958) Will Pay A Dividend Of CN¥0.15

Orient Securities Company Limited (SHSE:600958) has announced that it will pay a dividend of CN¥0.15 per share on the 28th of June. This payment means that the dividend yield will be 1.9%, which is around the industry average.

View our latest analysis for Orient Securities

Orient Securities' Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, Orient Securities' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 71.5%. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.

Orient Securities' Dividend Has Lacked Consistency

It's comforting to see that Orient Securities has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The payments haven't really changed that much since 9 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth Is Doubtful

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Orient Securities has seen earnings per share falling at 5.2% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Orient Securities' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Orient Securities' payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 3 warning signs for Orient Securities that investors should take into consideration. Is Orient Securities not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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