China Great Wall SecuritiesLtd (SZSE:002939) Has Announced That It Will Be Increasing Its Dividend To CN¥0.115

China Great Wall Securities Co.,Ltd.'s (SZSE:002939) dividend will be increasing from last year's payment of the same period to CN¥0.115 on 6th of August. This takes the annual payment to 1.7% of the current stock price, which is about average for the industry.

See our latest analysis for China Great Wall SecuritiesLtd

China Great Wall SecuritiesLtd's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. China Great Wall SecuritiesLtd is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share could rise by 5.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

China Great Wall SecuritiesLtd's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2019, the dividend has gone from CN¥0.20 total annually to CN¥0.115. The dividend has fallen 43% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

We Could See China Great Wall SecuritiesLtd's Dividend Growing

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. China Great Wall SecuritiesLtd has impressed us by growing EPS at 5.0% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On China Great Wall SecuritiesLtd's Dividend

Overall, we always like to see the dividend being raised, but we don't think China Great Wall SecuritiesLtd will make a great income stock. While China Great Wall SecuritiesLtd is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for China Great Wall SecuritiesLtd that investors should know about before committing capital to this stock. 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.

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