Anhui Sunhere Pharmaceutical ExcipientsLtd (SZSE:300452) Has Affirmed Its Dividend Of CN¥0.25

The board of Anhui Sunhere Pharmaceutical Excipients Co.,Ltd. (SZSE:300452) has announced that it will pay a dividend on the 29th of May, with investors receiving CN¥0.25 per share. This means that the annual payment will be 1.9% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Anhui Sunhere Pharmaceutical ExcipientsLtd

Anhui Sunhere Pharmaceutical ExcipientsLtd's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Anhui Sunhere Pharmaceutical ExcipientsLtd's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 48.4% over the next year. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Anhui Sunhere Pharmaceutical ExcipientsLtd Is Still Building Its Track Record

Anhui Sunhere Pharmaceutical ExcipientsLtd'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 dividend has gone from an annual total of CN¥0.0394 in 2016 to the most recent total annual payment of CN¥0.25. This means that it has been growing its distributions at 26% 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

Investors could be attracted to the stock based on the quality of its payment history. Anhui Sunhere Pharmaceutical ExcipientsLtd has seen EPS rising for the last five years, at 17% per annum. Anhui Sunhere Pharmaceutical ExcipientsLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Anhui Sunhere Pharmaceutical ExcipientsLtd'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. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Anhui Sunhere Pharmaceutical ExcipientsLtd 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.