Beijing Chieftain Control Engineering Technology (SZSE:300430) Has Announced That It Will Be Increasing Its Dividend To CN¥0.055

Beijing Chieftain Control Engineering Technology Co., Ltd. (SZSE:300430) will increase its dividend from last year's comparable payment on the 9th of July to CN¥0.055. Even though the dividend went up, the yield is still quite low at only 0.4%.

Check out our latest analysis for Beijing Chieftain Control Engineering Technology

Beijing Chieftain Control Engineering Technology's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Beijing Chieftain Control Engineering Technology is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. 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 12.0% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 6.9% by next year, which is in a pretty sustainable range.

Beijing Chieftain Control Engineering Technology's Dividend Has Lacked Consistency

Beijing Chieftain Control Engineering Technology has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2016, the annual payment back then was CN¥0.0463, compared to the most recent full-year payment of CN¥0.055. This means that it has been growing its distributions at 2.2% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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 Beijing Chieftain Control Engineering Technology has grown earnings per share at 12% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Beijing Chieftain Control Engineering Technology will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Beijing Chieftain Control Engineering Technology is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Beijing Chieftain Control Engineering Technology 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.

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