Shaanxi Panlong Pharmaceutical Group Limited By Share's (SZSE:002864) Shareholders Will Receive A Bigger Dividend Than Last Year

Shaanxi Panlong Pharmaceutical Group Limited By Share Ltd (SZSE:002864) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of June to CN¥0.22. Despite this raise, the dividend yield of 0.8% is only a modest boost to shareholder returns.

Check out our latest analysis for Shaanxi Panlong Pharmaceutical Group Limited By Share

Shaanxi Panlong Pharmaceutical Group Limited By Share's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Shaanxi Panlong Pharmaceutical Group Limited By Share was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 8.0% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Shaanxi Panlong Pharmaceutical Group Limited By Share Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the dividend has gone from CN¥0.10 total annually to CN¥0.22. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year 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.

We Could See Shaanxi Panlong Pharmaceutical Group Limited By Share's Dividend Growing

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 Shaanxi Panlong Pharmaceutical Group Limited By Share has grown earnings per share at 8.0% per year over the past five years. Shaanxi Panlong Pharmaceutical Group Limited By Share definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Shaanxi Panlong Pharmaceutical Group Limited By Share's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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 2 warning signs for Shaanxi Panlong Pharmaceutical Group Limited By Share that investors need to be conscious of moving forward. 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.