Qingdao Hi-Tech Moulds & Plastics Technology (SZSE:301022) Is Paying Out Less In Dividends Than Last Year

Qingdao Hi-Tech Moulds & Plastics Technology Co., Ltd.'s (SZSE:301022) dividend is being reduced from last year's payment covering the same period to CN¥0.2569 on the 29th of May. Based on this payment, the dividend yield will be 1.1%, which is lower than the average for the industry.

View our latest analysis for Qingdao Hi-Tech Moulds & Plastics Technology

Qingdao Hi-Tech Moulds & Plastics Technology Is Paying Out More Than It Is Earning

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before this announcement, Qingdao Hi-Tech Moulds & Plastics Technology was paying out 147% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

Looking forward, EPS could fall by 44.3% 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 reach 262%, which could put the dividend in jeopardy if the company's earnings don't improve.

Qingdao Hi-Tech Moulds & Plastics Technology Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of CN¥0.231 in 2022 to the most recent total annual payment of CN¥0.26. This implies that the company grew its distributions at a yearly rate of about 6.1% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Qingdao Hi-Tech Moulds & Plastics Technology to be a consistent dividend paying stock.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past three years, it looks as though Qingdao Hi-Tech Moulds & Plastics Technology's EPS has declined at around 44% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We're Not Big Fans Of Qingdao Hi-Tech Moulds & Plastics Technology's Dividend

In summary, it's not great to see that the dividend is being cut, but it is probably understandable given that the current payment level was quite high. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. The dividend doesn't inspire confidence that it will provide solid income in the future.

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. For example, we've identified 5 warning signs for Qingdao Hi-Tech Moulds & Plastics Technology (4 shouldn't be ignored!) that you should be aware of before investing. Is Qingdao Hi-Tech Moulds & Plastics Technology 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.