Luoyang Xinqianglian Slewing Bearing (SZSE:300850) Is Increasing Its Dividend To CN¥0.104

Luoyang Xinqianglian Slewing Bearing Co., Ltd.'s (SZSE:300850) periodic dividend will be increasing on the 21st of May to CN¥0.104, with investors receiving 8.3% more than last year's CN¥0.096. This takes the annual payment to 0.5% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Luoyang Xinqianglian Slewing Bearing

Luoyang Xinqianglian Slewing Bearing's Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Luoyang Xinqianglian Slewing Bearing was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to expand by 42.9%. If the dividend continues on this path, the payout ratio could be 8.0% by next year, which we think can be pretty sustainable going forward.

Luoyang Xinqianglian Slewing Bearing's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2021, the annual payment back then was CN¥0.142, compared to the most recent full-year payment of CN¥0.104. Doing the maths, this is a decline of about 9.8% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Luoyang Xinqianglian Slewing Bearing has impressed us by growing EPS at 26% 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.

Our Thoughts On Luoyang Xinqianglian Slewing Bearing's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Luoyang Xinqianglian Slewing Bearing is earning enough to cover the payments, the cash flows are lacking. We don't think Luoyang Xinqianglian Slewing Bearing is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Luoyang Xinqianglian Slewing Bearing you should be aware of, and 1 of them makes us a bit uncomfortable. 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.