Keysino Separation Technology's (SZSE:300899) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Keysino Separation Technology Inc. (SZSE:300899) has announced that it will be paying its dividend of CN¥0.36 on the 28th of May, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 1.8%.

See our latest analysis for Keysino Separation Technology

Keysino Separation Technology Is Paying Out More Than It Is Earning

Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. This high of a dividend payment could start to put pressure on the balance sheet in the future.

If the company can't turn things around, EPS could fall by 20.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 163%, which could put the dividend in jeopardy if the company's earnings don't improve.

Keysino Separation Technology's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. Since 2021, the dividend has gone from CN¥0.30 total annually to CN¥0.36. This means that it has been growing its distributions at 6.3% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Potential Is Shaky

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings per share has been sinking by 20% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

We're Not Big Fans Of Keysino Separation Technology's Dividend

Overall, while the dividend being raised can be good, there are some concerns about its long term sustainability. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.

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. To that end, Keysino Separation Technology has 4 warning signs (and 3 which are potentially serious) we think you should know about. Is Keysino Separation Technology not quite the opportunity you were looking for? Why not check out our selection of top 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.