Nanjing Xinjiekou Department Store (SHSE:600682) Has Affirmed Its Dividend Of CN¥0.03

The board of Nanjing Xinjiekou Department Store Co., Ltd. (SHSE:600682) has announced that it will pay a dividend on the 17th of July, with investors receiving CN¥0.03 per share. This payment means the dividend yield will be 0.6%, which is below the average for the industry.

See our latest analysis for Nanjing Xinjiekou Department Store

Nanjing Xinjiekou Department Store's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Nanjing Xinjiekou Department Store's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Unless the company can turn things around, EPS could fall by 20.9% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 12%, which is definitely feasible to continue.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was CN¥0.05 in 2014, and the most recent fiscal year payment was CN¥0.03. This works out to be a decline of approximately 5.0% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been sinking by 21% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Nanjing Xinjiekou Department Store's 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. We don't think Nanjing Xinjiekou Department Store is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Nanjing Xinjiekou Department Store that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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