Nantong JiangTian Chemical (SZSE:300927) Will Pay A Larger Dividend Than Last Year At CN¥0.145

Nantong JiangTian Chemical Co., Ltd.'s (SZSE:300927) periodic dividend will be increasing on the 21st of June to CN¥0.145, with investors receiving 7.4% more than last year's CN¥0.135. Despite this raise, the dividend yield of 0.9% is only a modest boost to shareholder returns.

View our latest analysis for Nantong JiangTian Chemical

Nantong JiangTian Chemical's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Nantong JiangTian Chemical was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Unless the company can turn things around, EPS could fall by 6.7% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 41%, which is definitely feasible to continue.

Nantong JiangTian Chemical Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2021, the annual payment back then was CN¥0.117, compared to the most recent full-year payment of CN¥0.145. This means that it has been growing its distributions at 7.5% per annum over that time. Nantong JiangTian Chemical has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Nantong JiangTian Chemical has seen earnings per share falling at 6.7% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

The Dividend Could Prove To Be Unreliable

Overall, we always like to see the dividend being raised, but we don't think Nantong JiangTian Chemical will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Nantong JiangTian Chemical (2 are significant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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