Asymchem Laboratories (Tianjin) (SZSE:002821) Is Paying Out A Dividend Of CN¥1.80

Asymchem Laboratories (Tianjin) Co., Ltd.'s (SZSE:002821) investors are due to receive a payment of CN¥1.80 per share on 28th of June. The dividend yield will be 2.7% based on this payment which is still above the industry average.

See our latest analysis for Asymchem Laboratories (Tianjin)

Asymchem Laboratories (Tianjin)'s Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Asymchem Laboratories (Tianjin)'s dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 5.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 42% by next year, which is in a pretty sustainable range.

Asymchem Laboratories (Tianjin) Is Still Building Its Track Record

Asymchem Laboratories (Tianjin)'s dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 7 years was CN¥0.179 in 2017, and the most recent fiscal year payment was CN¥1.80. This means that it has been growing its distributions at 39% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Asymchem Laboratories (Tianjin) has grown earnings per share at 31% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Asymchem Laboratories (Tianjin)'s Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Asymchem Laboratories (Tianjin) that investors should take into consideration. Is Asymchem Laboratories (Tianjin) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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