Metallurgical Corporation of China's (HKG:1618) Dividend Is Being Reduced To CN¥0.079

Metallurgical Corporation of China Ltd.'s (HKG:1618) dividend is being reduced from last year's payment covering the same period to CN¥0.079 on the 15th of August. The dividend yield will be in the average range for the industry at 5.0%.

View our latest analysis for Metallurgical Corporation of China

Metallurgical Corporation of China's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Metallurgical Corporation of China is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 18.7%. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Metallurgical Corporation of China Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of CN¥0.061 in 2014 to the most recent total annual payment of CN¥0.0733. This implies that the company grew its distributions at a yearly rate of about 1.9% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Metallurgical Corporation of China hasn't seen much change in its earnings per share over the last five years. If Metallurgical Corporation of China is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Metallurgical Corporation of China is earning enough to cover the payments, the cash flows are lacking. We don't think Metallurgical Corporation of China 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Metallurgical Corporation of China that investors should know about before committing capital to this stock. 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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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.

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