Ningbo Fangzheng Automobile MouldLtd (SZSE:300998) Is Due To Pay A Dividend Of CN¥0.10

Ningbo Fangzheng Automobile Mould Co.,Ltd. (SZSE:300998) has announced that it will pay a dividend of CN¥0.10 per share on the 21st of June. This means the annual payment will be 0.4% of the current stock price, which is lower than the industry average.

View our latest analysis for Ningbo Fangzheng Automobile MouldLtd

Ningbo Fangzheng Automobile MouldLtd Might Find It Hard To Continue The Dividend

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Even though Ningbo Fangzheng Automobile MouldLtd is not generating a profit, it is still paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

Recent, EPS has fallen by 59.7%, so this could continue over the next year. This means the company won't be turning a profit, which could place managers in the tough spot of having to choose between suspending the dividend or putting more pressure on the balance sheet.

Ningbo Fangzheng Automobile MouldLtd's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2021, the dividend has gone from CN¥0.20 total annually to CN¥0.10. Dividend payments have fallen sharply, down 50% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Potential Is Shaky

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Over the past five years, it looks as though Ningbo Fangzheng Automobile MouldLtd's EPS has declined at around 60% a year. 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.

Ningbo Fangzheng Automobile MouldLtd's Dividend Doesn't Look Great

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Ningbo Fangzheng Automobile MouldLtd that investors should take into consideration. Is Ningbo Fangzheng Automobile MouldLtd 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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