Yantai Jereh Oilfield Services Group's (SZSE:002353) Upcoming Dividend Will Be Larger Than Last Year's

Yantai Jereh Oilfield Services Group Co., Ltd. (SZSE:002353) will increase its dividend from last year's comparable payment on the 19th of June to CN¥0.49. Even though the dividend went up, the yield is still quite low at only 1.4%.

Check out our latest analysis for Yantai Jereh Oilfield Services Group

Yantai Jereh Oilfield Services Group's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Yantai Jereh Oilfield Services Group 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.

Over the next year, EPS is forecast to expand by 38.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of CN¥0.167 in 2014 to the most recent total annual payment of CN¥0.49. This implies that the company grew its distributions at a yearly rate of about 11% 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.

The Dividend Looks Likely To Grow

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. Yantai Jereh Oilfield Services Group has seen EPS rising for the last five years, at 28% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Yantai Jereh Oilfield Services Group will make a great income stock. While Yantai Jereh Oilfield Services Group is earning enough to cover the payments, the cash flows are lacking. We don't think Yantai Jereh Oilfield Services Group is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Yantai Jereh Oilfield Services Group that investors should know about before committing capital to this stock. Is Yantai Jereh Oilfield Services Group not quite the opportunity you were looking for? Why not check out our selection of top 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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