Ziyuanyuan Holdings Group (HKG:8223) Will Pay A Dividend Of CN¥0.025

The board of Ziyuanyuan Holdings Group Limited (HKG:8223) has announced that it will pay a dividend on the 13th of July, with investors receiving CN¥0.025 per share. This means the annual payment will be 1.4% of the current stock price, which is lower than the industry average.

View our latest analysis for Ziyuanyuan Holdings Group

Ziyuanyuan Holdings Group's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Ziyuanyuan Holdings Group's earnings easily covered the dividend, but free cash flows were negative. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

Looking forward, earnings per share could rise by 5.1% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 55%, which is in the range that makes us comfortable with the sustainability of the dividend.

Ziyuanyuan Holdings Group Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 3 years was CN¥0.0249 in 2020, and the most recent fiscal year payment was CN¥0.0219. The dividend has shrunk at around 4.2% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Ziyuanyuan Holdings Group has been growing its earnings per share at 5.1% a year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Our Thoughts On Ziyuanyuan Holdings Group's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Ziyuanyuan Holdings Group's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for Ziyuanyuan Holdings Group (of which 3 are a bit unpleasant!) you should know about. Is Ziyuanyuan Holdings Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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