Xiangyang BOYA Precision Industrial Equipments (SZSE:300971) Is Due To Pay A Dividend Of CN¥0.25

The board of Xiangyang BOYA Precision Industrial Equipments Co., Ltd (SZSE:300971) has announced that it will pay a dividend of CN¥0.25 per share on the 6th of June. The dividend yield is 1.3% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Xiangyang BOYA Precision Industrial Equipments

Xiangyang BOYA Precision Industrial Equipments' Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, Xiangyang BOYA Precision Industrial Equipments was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 3.6% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could be 32%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Xiangyang BOYA Precision Industrial Equipments' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The annual payment during the last 3 years was CN¥0.40 in 2021, and the most recent fiscal year payment was CN¥0.25. This works out to a decline of approximately 38% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Xiangyang BOYA Precision Industrial Equipments May Find It Hard To Grow The Dividend

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Xiangyang BOYA Precision Industrial Equipments has seen earnings per share falling at 3.6% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Xiangyang BOYA Precision Industrial Equipments' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Xiangyang BOYA Precision Industrial Equipments is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for Xiangyang BOYA Precision Industrial Equipments you should be aware of, and 1 of them is significant. 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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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.