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 makes the dividend yield about the same as the industry average at 7.5%.
Our free stock report includes 2 warning signs investors should be aware of before investing in Suxin Joyful Life Services. Read for free now.Suxin Joyful Life Services' Projected Earnings Seem Likely To Cover Future Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend was quite easily covered by Suxin Joyful Life Services' earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, EPS could fall by 12.2% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 69%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
See our latest analysis for Suxin Joyful Life Services
Suxin Joyful Life Services 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. Since 2023, the annual payment back then was CN¥0.17, compared to the most recent full-year payment of CN¥0.36. This implies that the company grew its distributions at a yearly rate of about 46% over that duration. Suxin Joyful Life Services 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.
Dividend Growth Potential Is Shaky
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Earnings per share has been sinking by 12% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.
In Summary
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Suxin Joyful Life Services is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Suxin Joyful Life Services that investors should know about before committing capital to this stock. 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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