Sany Heavy Equipment International Holdings (HKG:631) Will Pay A Dividend Of CN¥0.19

Sany Heavy Equipment International Holdings Company Limited (HKG:631) will pay a dividend of CN¥0.19 on the 26th of June. This payment means that the dividend yield will be 3.2%, which is around the industry average.

View our latest analysis for Sany Heavy Equipment International Holdings

Sany Heavy Equipment International Holdings' Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, Sany Heavy Equipment International Holdings was paying only paying out a fraction of earnings, but the payment was a massive 358% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 87.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sany Heavy Equipment International Holdings Doesn't Have A Long Payment History

It is great to see that Sany Heavy Equipment International Holdings has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2019, the annual payment back then was CN¥0.0853, compared to the most recent full-year payment of CN¥0.175. This means that it has been growing its distributions at 16% per annum over that time. Sany Heavy Equipment International Holdings has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Sany Heavy Equipment International Holdings May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. While EPS growth is quite low, Sany Heavy Equipment International Holdings has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Sany Heavy Equipment International Holdings' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Sany Heavy Equipment International Holdings is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Sany Heavy Equipment International Holdings that investors should take into consideration. Is Sany Heavy Equipment International Holdings 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.