Sany Heavy Equipment International Holdings (HKG:631) Will Pay A Larger Dividend Than Last Year At CN¥0.29

Sany Heavy Equipment International Holdings Company Limited (HKG:631) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of June to CN¥0.29. This will take the dividend yield to an attractive 5.1%, providing a nice boost to shareholder returns.

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Sany Heavy Equipment International Holdings' Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Sany Heavy Equipment International Holdings' dividend made up quite a large proportion of earnings but only 71% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 162.8% over the next year. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 38% which brings it into quite a comfortable range.

See our latest analysis for Sany Heavy Equipment International Holdings

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 dividend has gone from CN¥0.0853 total annually to CN¥0.266. This implies that the company grew its distributions at a yearly rate of about 21% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 2.7% per year. Slow growth and a high payout ratio could mean that Sany Heavy Equipment International Holdings has maxed out the amount that it has been able to pay to shareholders. When a company prefers to pay out cash to its shareholders instead of reinvesting it, this can often say a lot about that company's dividend prospects.

Our Thoughts On Sany Heavy Equipment International Holdings' Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Sany Heavy Equipment International Holdings that investors should know about before committing capital to this stock. 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.