JOYY's (NASDAQ:YY) Dividend Will Be Reduced To $0.1975

JOYY Inc. (NASDAQ:YY) is reducing its dividend from last year's comparable payment to $0.1975 on the 13th of October. The dividend yield of 2.1% is still a nice boost to shareholder returns, despite the cut.

See our latest analysis for JOYY

JOYY's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, JOYY's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 54.3% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could reach 75%, which is definitely on the higher side.

JOYY's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The annual payment during the last 3 years was $1.24 in 2020, and the most recent fiscal year payment was $0.80. Dividend payments have fallen sharply, down 35% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Achieve

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings have grown at around 4.4% a year for the past five years, which isn't massive but still better than seeing them shrink. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Our Thoughts On JOYY's Dividend

Overall, we think that JOYY could make a reasonable income stock, even though it did cut the dividend this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for JOYY you should be aware of, and 1 of them doesn't sit too well with us. If you are a dividend investor, you might also want to look at our curated list of high yield 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.