Hangzhou Huning Elevator Parts (SZSE:300669) Is Paying Out A Dividend Of CN¥0.12

Hangzhou Huning Elevator Parts Co., Ltd. (SZSE:300669) will pay a dividend of CN¥0.12 on the 28th of May. This payment means the dividend yield will be 0.8%, which is below the average for the industry.

Check out our latest analysis for Hangzhou Huning Elevator Parts

Hangzhou Huning Elevator Parts' Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Hangzhou Huning Elevator Parts' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 0.7% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 49% by next year, which is in a pretty sustainable range.

Hangzhou Huning Elevator Parts' Dividend Has Lacked Consistency

It's comforting to see that Hangzhou Huning Elevator Parts has been paying a dividend for a number of years now, however it has been cut at least once in that time. 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 6 years was CN¥0.0923 in 2018, and the most recent fiscal year payment was CN¥0.12. This means that it has been growing its distributions at 4.5% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend's Growth Prospects Are Limited

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. Hangzhou Huning Elevator Parts hasn't seen much change in its earnings per share over the last five years. Growth of 0.7% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Hangzhou Huning Elevator Parts is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Hangzhou Huning Elevator Parts that investors need to be conscious of moving forward. Is Hangzhou Huning Elevator Parts not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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