ShenZhen Click TechnologyLTD's (SZSE:002782) Dividend Will Be CN¥0.08

The board of ShenZhen Click Technology Co.,LTD. (SZSE:002782) has announced that it will pay a dividend on the 15th of May, with investors receiving CN¥0.08 per share. The dividend yield is 0.7% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for ShenZhen Click TechnologyLTD

ShenZhen Click TechnologyLTD's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, ShenZhen Click TechnologyLTD's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Analysts expect a massive rise in earnings per share in the next year. If the dividend extends its recent trend, estimates say the dividend could reach 7.1%, which we would be comfortable to see continuing.

ShenZhen Click TechnologyLTD's Dividend Has Lacked Consistency

It's comforting to see that ShenZhen Click TechnologyLTD has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of CN¥0.04 in 2016 to the most recent total annual payment of CN¥0.08. This implies that the company grew its distributions at a yearly rate of about 9.1% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

We Could See ShenZhen Click TechnologyLTD's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. ShenZhen Click TechnologyLTD has impressed us by growing EPS at 8.4% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like ShenZhen Click TechnologyLTD's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for ShenZhen Click TechnologyLTD that investors need to be conscious of moving forward. 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.