Precision Tsugami (China) Corporation Limited's (HKG:1651) investors are due to receive a payment of CN¥0.40 per share on 2nd of September. Based on this payment, the dividend yield on the company's stock will be 8.5%, which is an attractive boost to shareholder returns.
View our latest analysis for Precision Tsugami (China)
Precision Tsugami (China)'s Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Precision Tsugami (China) was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 53.4% over the next year. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.
Precision Tsugami (China) Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of CN¥0.138 in 2018 to the most recent total annual payment of CN¥0.743. This means that it has been growing its distributions at 32% per annum over that time. Precision Tsugami (China) has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
Precision Tsugami (China) Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. Precision Tsugami (China) has impressed us by growing EPS at 5.5% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.
Our Thoughts On Precision Tsugami (China)'s Dividend
Overall, a consistent dividend is a good thing, and we think that Precision Tsugami (China) has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Precision Tsugami (China) that you should be aware of before investing. Is Precision Tsugami (China) 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.
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