Sino BiologicalInc (SZSE:301047) Is Paying Out A Dividend Of CN¥2.00

Sino Biological,Inc. (SZSE:301047) has announced that it will pay a dividend of CN¥2.00 per share on the 23rd of May. The dividend yield will be 2.6% based on this payment which is still above the industry average.

View our latest analysis for Sino BiologicalInc

Sino BiologicalInc's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the dividend made up 117% of earnings, and the company was generating negative free cash flows. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

EPS is set to grow by 39.1% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 83% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Sino BiologicalInc's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2022, the annual payment back then was CN¥5.26, compared to the most recent full-year payment of CN¥2.00. Dividend payments have fallen sharply, down 62% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings per share has been sinking by 51% over the last three years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Sino BiologicalInc's Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Sino BiologicalInc make more consistent payments in the future. 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. Overall, the dividend is not reliable enough to make this a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Sino BiologicalInc that investors should take into consideration. Is Sino BiologicalInc not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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