Shiyan Taixiang IndustryLtd (SZSE:301192) Is Due To Pay A Dividend Of CN¥0.20

Shiyan Taixiang Industry Co.,Ltd. (SZSE:301192) will pay a dividend of CN¥0.20 on the 31st of May. This payment means the dividend yield will be 1.3%, which is below the average for the industry.

Check out our latest analysis for Shiyan Taixiang IndustryLtd

Shiyan Taixiang IndustryLtd's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Shiyan Taixiang IndustryLtd was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Unless the company can turn things around, EPS could fall by 20.6% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 66%, which is definitely feasible to continue.

Shiyan Taixiang IndustryLtd Doesn't Have A Long Payment History

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. Shiyan Taixiang IndustryLtd's earnings per share has shrunk at 21% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Shiyan Taixiang IndustryLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Shiyan Taixiang IndustryLtd is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 4 warning signs for Shiyan Taixiang IndustryLtd (2 are a bit concerning!) that you should be aware of before investing. Is Shiyan Taixiang IndustryLtd 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.