Zhejiang Jinggong Integration Technology (SZSE:002006) Is Paying Out Less In Dividends Than Last Year

Zhejiang Jinggong Integration Technology Co., Ltd. (SZSE:002006) has announced that on 19th of June, it will be paying a dividend ofCN¥0.15, which a reduction from last year's comparable dividend. This means that the dividend yield is 1.1%, which is a bit low when comparing to other companies in the industry.

Check out our latest analysis for Zhejiang Jinggong Integration Technology

Zhejiang Jinggong Integration Technology'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. Based on the last payment, Zhejiang Jinggong Integration Technology was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 154.0%. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

Zhejiang Jinggong Integration Technology's Dividend Has Lacked Consistency

It's comforting to see that Zhejiang Jinggong Integration Technology has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of CN¥0.02 in 2017 to the most recent total annual payment of CN¥0.15. This means that it has been growing its distributions at 33% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Zhejiang Jinggong Integration Technology has grown earnings per share at 60% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While Zhejiang Jinggong Integration Technology is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Zhejiang Jinggong Integration Technology (of which 1 is significant!) you should know about. 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.