Changzhou Qianhong BiopharmaLTD (SZSE:002550) Has Affirmed Its Dividend Of CN¥0.12

The board of Changzhou Qianhong Biopharma CO.,LTD (SZSE:002550) has announced that it will pay a dividend of CN¥0.12 per share on the 29th of May. This means that the annual payment will be 2.1% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Changzhou Qianhong BiopharmaLTD

Changzhou Qianhong BiopharmaLTD's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before this announcement, Changzhou Qianhong BiopharmaLTD was paying out 78% of earnings, but a comparatively small 24% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 115.4% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 38% which would be quite comfortable going to take the dividend forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from CN¥0.0625 total annually to CN¥0.12. This means that it has been growing its distributions at 6.7% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Changzhou Qianhong BiopharmaLTD hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Changzhou Qianhong BiopharmaLTD's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Changzhou Qianhong BiopharmaLTD's payments, as there could be some issues with sustaining them into the future. 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. We don't think Changzhou Qianhong BiopharmaLTD is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Changzhou Qianhong BiopharmaLTD 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.