San Yang Ma (Chongqing) LogisticsLtd (SZSE:001317) Will Pay A Larger Dividend Than Last Year At CN¥0.12

The board of San Yang Ma (Chongqing) Logistics Co.,Ltd. (SZSE:001317) has announced that it will be paying its dividend of CN¥0.12 on the 11th of June, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 0.5%.

View our latest analysis for San Yang Ma (Chongqing) LogisticsLtd

San Yang Ma (Chongqing) LogisticsLtd's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, San Yang Ma (Chongqing) LogisticsLtd's earnings easily covered the dividend, but free cash flows were negative. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.

Unless the company can turn things around, EPS could fall by 22.5% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 44%, which we are pretty comfortable with and we think is feasible on an earnings basis.

San Yang Ma (Chongqing) LogisticsLtd's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The annual payment during the last 2 years was CN¥0.40 in 2022, and the most recent fiscal year payment was CN¥0.12. Dividend payments have fallen sharply, down 70% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Limited Growth Potential

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Earnings per share has been sinking by 22% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

The Dividend Could Prove To Be Unreliable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think San Yang Ma (Chongqing) LogisticsLtd is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for San Yang Ma (Chongqing) LogisticsLtd that you should be aware of before investing. Is San Yang Ma (Chongqing) LogisticsLtd not quite the opportunity you were looking for? Why not check out our selection of top 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.