Anhui Tongguan Copper Foil Group (SZSE:301217) Is Reducing Its Dividend To CN¥0.06

Anhui Tongguan Copper Foil Group Co., Ltd. (SZSE:301217) has announced that on 11th of June, it will be paying a dividend ofCN¥0.06, which a reduction from last year's comparable dividend. This payment takes the dividend yield to 0.6%, which only provides a modest boost to overall returns.

See our latest analysis for Anhui Tongguan Copper Foil Group

Anhui Tongguan Copper Foil Group Might Find It Hard To Continue The Dividend

Even a low dividend yield can be attractive if it is sustained for years on end. Even in the absence of profits, Anhui Tongguan Copper Foil Group is paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

Over the next year, EPS might fall by 21.9% based on recent performance. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

Anhui Tongguan Copper Foil Group's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The annual payment during the last 2 years was CN¥0.15 in 2022, and the most recent fiscal year payment was CN¥0.06. Dividend payments have fallen sharply, down 60% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Earnings per share has been sinking by 22% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

We're Not Big Fans Of Anhui Tongguan Copper Foil Group's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

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. Taking the debate a bit further, we've identified 1 warning sign for Anhui Tongguan Copper Foil Group that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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