Guizhou Taiyong-Changzheng TechnologyLtd (SZSE:002927) Is Paying Out A Larger Dividend Than Last Year

Guizhou Taiyong-Changzheng Technology Co.,Ltd. (SZSE:002927) has announced that it will be increasing its dividend from last year's comparable payment on the 13th of June to CN¥0.135. Although the dividend is now higher, the yield is only 1.1%, which is below the industry average.

View our latest analysis for Guizhou Taiyong-Changzheng TechnologyLtd

Guizhou Taiyong-Changzheng TechnologyLtd's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, Guizhou Taiyong-Changzheng TechnologyLtd's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 1.4% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could be 46%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Guizhou Taiyong-Changzheng TechnologyLtd's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of CN¥0.0782 in 2018 to the most recent total annual payment of CN¥0.135. This means that it has been growing its distributions at 9.5% per annum over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Guizhou Taiyong-Changzheng TechnologyLtd May Find It Hard To Grow The Dividend

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. Guizhou Taiyong-Changzheng TechnologyLtd hasn't seen much change in its earnings per share over the last five years.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Guizhou Taiyong-Changzheng TechnologyLtd's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think Guizhou Taiyong-Changzheng TechnologyLtd is a great stock to add to your portfolio if income is your focus.

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. For example, we've picked out 2 warning signs for Guizhou Taiyong-Changzheng TechnologyLtd that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.