Jiangxi Sanxin MedtecLtd (SZSE:300453) Is Due To Pay A Dividend Of CN¥0.15

The board of Jiangxi Sanxin Medtec Co.,Ltd. (SZSE:300453) has announced that it will pay a dividend on the 25th of April, with investors receiving CN¥0.15 per share. This means that the annual payment will be 2.0% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Jiangxi Sanxin MedtecLtd

Jiangxi Sanxin MedtecLtd's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Jiangxi Sanxin MedtecLtd's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 39.4% 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 31%, which is in the range that makes us comfortable with the sustainability of the dividend.

Jiangxi Sanxin MedtecLtd Doesn't Have A Long Payment History

It is great to see that Jiangxi Sanxin MedtecLtd has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 8 years was CN¥0.0321 in 2016, and the most recent fiscal year payment was CN¥0.15. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Jiangxi Sanxin MedtecLtd has grown earnings per share at 39% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Jiangxi Sanxin MedtecLtd Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Jiangxi Sanxin MedtecLtd might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Jiangxi Sanxin MedtecLtd that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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