Jiangsu Yinhe ElectronicsLtd's (SZSE:002519) Dividend Will Be CN¥0.10

The board of Jiangsu Yinhe Electronics Co.,Ltd. (SZSE:002519) has announced that it will pay a dividend of CN¥0.10 per share on the 23rd of April. This means the dividend yield will be fairly typical at 2.1%.

See our latest analysis for Jiangsu Yinhe ElectronicsLtd

Jiangsu Yinhe ElectronicsLtd's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, Jiangsu Yinhe ElectronicsLtd's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share could rise by 70.3% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.

Jiangsu Yinhe ElectronicsLtd's Dividend Has Lacked Consistency

It's comforting to see that Jiangsu Yinhe ElectronicsLtd has been paying a dividend for a number of years now, however it has been cut at least once in that time. 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¥0.235 in 2015 to the most recent total annual payment of CN¥0.10. This works out to be a decline of approximately 9.1% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Jiangsu Yinhe ElectronicsLtd has seen EPS rising for the last five years, at 70% per annum. Jiangsu Yinhe ElectronicsLtd is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Jiangsu Yinhe ElectronicsLtd Looks Like A Great Dividend Stock

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. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Jiangsu Yinhe ElectronicsLtd 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.

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