Hangzhou Zhongtai Cryogenic Technology's (SZSE:300435) Upcoming Dividend Will Be Larger Than Last Year's

Hangzhou Zhongtai Cryogenic Technology Corporation's (SZSE:300435) dividend will be increasing from last year's payment of the same period to CN¥0.15 on 22nd of May. Although the dividend is now higher, the yield is only 1.1%, which is below the industry average.

View our latest analysis for Hangzhou Zhongtai Cryogenic Technology

Hangzhou Zhongtai Cryogenic Technology's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, Hangzhou Zhongtai Cryogenic Technology's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 73.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 10% by next year, which is in a pretty sustainable range.

Hangzhou Zhongtai Cryogenic Technology's Dividend Has Lacked Consistency

Looking back, Hangzhou Zhongtai Cryogenic Technology's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2015, the annual payment back then was CN¥0.0453, compared to the most recent full-year payment of CN¥0.15. This means that it has been growing its distributions at 14% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Hangzhou Zhongtai Cryogenic Technology has impressed us by growing EPS at 29% 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.

Hangzhou Zhongtai Cryogenic Technology Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Taking the debate a bit further, we've identified 1 warning sign for Hangzhou Zhongtai Cryogenic Technology that investors need to be conscious of moving forward. 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.