Shenzhen Liande Automation Equipmentltd (SZSE:300545) Is Increasing Its Dividend To CN¥0.15

Shenzhen Liande Automation Equipment co.,ltd. (SZSE:300545) will increase its dividend from last year's comparable payment on the 29th of May to CN¥0.15. Despite this raise, the dividend yield of 0.6% is only a modest boost to shareholder returns.

Check out our latest analysis for Shenzhen Liande Automation Equipmentltd

Shenzhen Liande Automation Equipmentltd'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. Shenzhen Liande Automation Equipmentltd 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.

The next year is set to see EPS grow by 27.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 11% by next year, which is in a pretty sustainable range.

Shenzhen Liande Automation Equipmentltd's Dividend Has Lacked Consistency

Shenzhen Liande Automation Equipmentltd 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. The annual payment during the last 7 years was CN¥0.10 in 2017, and the most recent fiscal year payment was CN¥0.15. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Shenzhen Liande Automation Equipmentltd has been growing its earnings per share at 10% a year over the past five years. Shenzhen Liande Automation Equipmentltd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Shenzhen Liande Automation Equipmentltd management tenure, salary, and performance. 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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