Jujiang Construction Group's (HKG:1459) Dividend Will Be HK$0.04

The board of Jujiang Construction Group Co., Ltd. (HKG:1459) has announced that it will pay a dividend on the 26th of July, with investors receiving HK$0.04 per share. Based on this payment, the dividend yield will be 6.0%, which is fairly typical for the industry.

View our latest analysis for Jujiang Construction Group

Jujiang Construction Group's Earnings Easily Cover the Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Jujiang Construction Group's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 0.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

Jujiang Construction Group's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The first annual payment during the last 3 years was CN¥0.034 in 2019, and the most recent fiscal year payment was CN¥0.033. This works out to be a decline of approximately 1.8% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Jujiang Construction Group's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Our Thoughts On Jujiang Construction Group's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for Jujiang Construction Group that you should be aware of before investing. Is Jujiang Construction Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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