YTO International Express and Supply Chain Technology (HKG:6123) Has Announced That Its Dividend Will Be Reduced To HK$0.033

YTO International Express and Supply Chain Technology Limited (HKG:6123) has announced that on 7th of July, it will be paying a dividend ofHK$0.033, which a reduction from last year's comparable dividend. This means that the annual payment is 2.0% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for YTO International Express and Supply Chain Technology

YTO International Express and Supply Chain Technology's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, YTO International Express and Supply Chain Technology was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 6.8% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 11%, which is in the range that makes us comfortable with the sustainability of the dividend.

YTO International Express and Supply Chain Technology's Dividend Has Lacked Consistency

Looking back, YTO International Express and Supply Chain Technology's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 8 years was HK$0.016 in 2015, and the most recent fiscal year payment was HK$0.033. This implies that the company grew its distributions at a yearly rate of about 9.5% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

YTO International Express and Supply Chain Technology Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. YTO International Express and Supply Chain Technology has seen EPS rising for the last five years, at 6.8% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On YTO International Express and Supply Chain Technology's Dividend

Overall, we think that YTO International Express and Supply Chain Technology could make a reasonable income stock, even though it did cut the dividend this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. For instance, we've picked out 2 warning signs for YTO International Express and Supply Chain Technology that investors should take into consideration. Is YTO International Express and Supply Chain Technology 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.