Shenzhen Jove Enterprise (SZSE:300814) Is Paying Out Less In Dividends Than Last Year

Shenzhen Jove Enterprise Limited's (SZSE:300814) dividend is being reduced from last year's payment covering the same period to CN¥0.113 on the 12th of July. This means that the annual payment is 0.4% of the current stock price, which is lower than what the rest of the industry is paying.

View our latest analysis for Shenzhen Jove Enterprise

Shenzhen Jove Enterprise Doesn't Earn Enough To Cover Its Payments

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. The last dividend made up quite a large portion of free cash flows, and this was made worse by the lack of free cash flows. Generally, we think that this would be a risky long term practice.

If the company can't turn things around, EPS could fall by 38.8% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 140%, which is definitely a bit high to be sustainable going forward.

Shenzhen Jove Enterprise's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. The dividend has gone from an annual total of CN¥0.16 in 2022 to the most recent total annual payment of CN¥0.113. The dividend has fallen 29% over 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.

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 39% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

The Dividend Could Prove To Be Unreliable

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The payments are bit high to be considered sustainable, and the track record isn't the best. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Shenzhen Jove Enterprise (of which 1 is a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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