Beijing AriTime Intelligent Control (SHSE:600560) Is Increasing Its Dividend To CN¥0.071

Beijing AriTime Intelligent Control Co., Ltd.'s (SHSE:600560) dividend will be increasing from last year's payment of the same period to CN¥0.071 on 25th of June. Although the dividend is now higher, the yield is only 0.5%, which is below the industry average.

Check out our latest analysis for Beijing AriTime Intelligent Control

Beijing AriTime Intelligent Control's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, Beijing AriTime Intelligent Control's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

If the trend of the last few years continues, EPS will grow by 15.9% over the next 12 months. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was CN¥0.085 in 2014, and the most recent fiscal year payment was CN¥0.071. This works out to be a decline of approximately 1.8% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Beijing AriTime Intelligent Control has been growing its earnings per share at 16% a year over the past five years. Beijing AriTime Intelligent Control definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Beijing AriTime Intelligent Control's Dividend

Overall, we always like to see the dividend being raised, but we don't think Beijing AriTime Intelligent Control will make a great income stock. While Beijing AriTime Intelligent Control is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Beijing AriTime Intelligent Control stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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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