Shandong Sinocera Functional Material (SZSE:300285) Has Affirmed Its Dividend Of CN¥0.10

Shandong Sinocera Functional Material Co., Ltd. (SZSE:300285) has announced that it will pay a dividend of CN¥0.10 per share on the 28th of May. This payment means the dividend yield will be 0.5%, which is below the average for the industry.

Check out our latest analysis for Shandong Sinocera Functional Material

Shandong Sinocera Functional Material's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, Shandong Sinocera Functional Material's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 97.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 10% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of CN¥0.025 in 2014 to the most recent total annual payment of CN¥0.10. This implies that the company grew its distributions at a yearly rate of about 15% 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's Growth Prospects Are Limited

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. Unfortunately, Shandong Sinocera Functional Material's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Shandong Sinocera Functional Material's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Given that earnings are not growing, the dividend does not look nearly so attractive. Businesses can change though, and we think it would make sense to see what analysts are forecasting for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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