Jiangsu Pacific Quartz's (SHSE:603688) Upcoming Dividend Will Be Larger Than Last Year's

The board of Jiangsu Pacific Quartz Co., Ltd (SHSE:603688) has announced that it will be paying its dividend of CN¥5.70 on the 22nd of May, an increased payment from last year's comparable dividend. This takes the dividend yield to 9.9%, which shareholders will be pleased with.

View our latest analysis for Jiangsu Pacific Quartz

Jiangsu Pacific Quartz's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Jiangsu Pacific Quartz's earnings. This means that a large portion of its earnings are being retained to grow the business.

Earnings per share is forecast to rise by 12.0% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 75% which is a bit high but can definitely be sustainable.

Jiangsu Pacific Quartz's Dividend Has Lacked Consistency

Looking back, Jiangsu Pacific Quartz's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of CN¥0.333 in 2015 to the most recent total annual payment of CN¥7.00. This means that it has been growing its distributions at 40% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Jiangsu Pacific Quartz has impressed us by growing EPS at 94% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Jiangsu Pacific Quartz's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Jiangsu Pacific Quartz (1 is potentially serious!) that you should be aware of before investing. 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.