Suxin Joyful Life Services (HKG:2152) Is Increasing Its Dividend To CN¥0.3902

Suxin Joyful Life Services Co., Ltd. (HKG:2152) will increase its dividend from last year's comparable payment on the 12th of August to CN¥0.3902. This will take the annual payment to 8.5% of the stock price, which is above what most companies in the industry pay.

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Suxin Joyful Life Services' Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Suxin Joyful Life Services' dividend was only 56% of earnings, however it was paying out 1,700% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

EPS is set to fall by 12.2% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could be 69%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for Suxin Joyful Life Services

Suxin Joyful Life Services Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2023, the dividend has gone from CN¥0.17 total annually to CN¥0.36. This means that it has been growing its distributions at 46% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Suxin Joyful Life Services' earnings per share has shrunk at 12% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

The Dividend Could Prove To Be Unreliable

Overall, we always like to see the dividend being raised, but we don't think Suxin Joyful Life Services will make a great income stock. While Suxin Joyful Life Services is earning enough to cover the payments, the cash flows are lacking. We don't think Suxin Joyful Life Services is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 3 warning signs for Suxin Joyful Life Services that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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