Yangzijiang Financial Holding Ltd.'s (SGX:YF8) dividend will be increasing from last year's payment of the same period to SGD0.0345 on 15th of May. This will take the annual payment to 4.3% of the stock price, which is above what most companies in the industry pay.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Yangzijiang Financial Holding's stock price has increased by 92% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Yangzijiang Financial Holding's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Yangzijiang Financial Holding 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.

Looking forward, earnings per share is forecast to rise by 16.7% over the next year. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

SGX:YF8 Historic Dividend April 1st 2025

Check out our latest analysis for Yangzijiang Financial Holding

Yangzijiang Financial Holding Doesn't Have A Long Payment History

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 dividend has gone from SGD0.018 total annually to SGD0.0345. This works out to be a compound annual growth rate $(CAGR)$ of approximately 38% a year over that time. Yangzijiang Financial Holding 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 May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, Yangzijiang Financial Holding's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. If Yangzijiang Financial Holding is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Yangzijiang Financial Holding's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. 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.

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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Yangzijiang Financial Holding stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.