Suzhou YourBest New-type MaterialsLtd (SZSE:301266) Will Pay A Larger Dividend Than Last Year At CN¥0.27

The board of Suzhou YourBest New-type Materials Co.,Ltd. (SZSE:301266) has announced that it will be paying its dividend of CN¥0.27 on the 28th of May, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 0.7%.

Check out our latest analysis for Suzhou YourBest New-type MaterialsLtd

Suzhou YourBest New-type MaterialsLtd's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Prior to this announcement, Suzhou YourBest New-type MaterialsLtd's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Analysts expect a massive rise in earnings per share in the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 6.1%, so there isn't too much pressure on the dividend.

Suzhou YourBest New-type MaterialsLtd Doesn't Have A Long Payment History

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Suzhou YourBest New-type MaterialsLtd has been growing its earnings per share at 15% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Suzhou YourBest New-type MaterialsLtd's prospects of growing its dividend payments in the future.

Our Thoughts On Suzhou YourBest New-type MaterialsLtd's Dividend

Overall, we always like to see the dividend being raised, but we don't think Suzhou YourBest New-type MaterialsLtd will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Suzhou YourBest New-type MaterialsLtd (1 is concerning!) 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.