Shanghai Industrial DevelopmentLtd's (SHSE:600748) Dividend Will Be Increased To CN¥0.021

Shanghai Industrial Development Co.,Ltd (SHSE:600748) will increase its dividend on the 31st of July to CN¥0.021, which is 5.0% higher than last year's payment from the same period of CN¥0.02. Although the dividend is now higher, the yield is only 0.8%, which is below the industry average.

See our latest analysis for Shanghai Industrial DevelopmentLtd

Shanghai Industrial DevelopmentLtd's Distributions May Be Difficult To Sustain

If it is predictable over a long period, even low dividend yields can be attractive. Despite not generating a profit, Shanghai Industrial DevelopmentLtd is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

Recent, EPS has fallen by 36.3%, so this could continue over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from CN¥0.0385 total annually to CN¥0.021. The dividend has shrunk at around 5.9% a year during that period. 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.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Over the past five years, it looks as though Shanghai Industrial DevelopmentLtd's EPS has declined at around 36% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Shanghai Industrial DevelopmentLtd's Dividend Doesn't Look Great

In conclusion, we have some concerns about this dividend, even though it being raised is good. 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. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for Shanghai Industrial DevelopmentLtd that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.

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