JiangXi BaiSheng Intelligent Technology (SZSE:301083) Is Increasing Its Dividend To CN¥0.12

JiangXi BaiSheng Intelligent Technology Co., Ltd. (SZSE:301083) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of June to CN¥0.12. Even though the dividend went up, the yield is still quite low at only 0.8%.

Check out our latest analysis for JiangXi BaiSheng Intelligent Technology

JiangXi BaiSheng Intelligent Technology's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last dividend, JiangXi BaiSheng Intelligent Technology is earning enough to cover the payment, but then it makes up 107% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, EPS could fall by 9.8% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 60%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

JiangXi BaiSheng Intelligent Technology Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of CN¥0.035 in 2022 to the most recent total annual payment of CN¥0.12. This works out to be a compound annual growth rate (CAGR) of approximately 85% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth Is Doubtful

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. JiangXi BaiSheng Intelligent Technology has seen earnings per share falling at 9.8% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

JiangXi BaiSheng Intelligent Technology's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think JiangXi BaiSheng Intelligent Technology's payments are rock solid. While JiangXi BaiSheng Intelligent Technology is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for JiangXi BaiSheng Intelligent Technology (1 shouldn't be ignored!) that you should be aware of before investing. 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.