Jiangsu New Technology GroupLtd (SZSE:301229) Is Increasing Its Dividend To CN¥0.125

The board of Jiangsu New Technology Group Co.,Ltd. (SZSE:301229) has announced that it will be paying its dividend of CN¥0.125 on the 21st of May, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 0.6%, which is below the industry average.

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 Jiangsu New Technology GroupLtd's stock price has increased by 32% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Jiangsu New Technology GroupLtd

Jiangsu New Technology GroupLtd's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Jiangsu New Technology GroupLtd was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, EPS could fall by 0.5% 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 8.5%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Jiangsu New Technology GroupLtd Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the annual payment back then was CN¥0.10, compared to the most recent full-year payment of CN¥0.125. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Jiangsu New Technology GroupLtd May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Unfortunately, Jiangsu New Technology GroupLtd's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Jiangsu New Technology GroupLtd's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Jiangsu New Technology GroupLtd will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Jiangsu New Technology GroupLtd stock. Is Jiangsu New Technology GroupLtd 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.