Hangzhou Huasu TechnologyLtd's (SZSE:301157) Shareholders Will Receive A Smaller Dividend Than Last Year

Hangzhou Huasu Technology Co.,Ltd.'s (SZSE:301157) dividend is being reduced from last year's payment covering the same period to CN¥0.15 on the 30th of May. This means that the dividend yield is 0.4%, which is a bit low when comparing to other companies in the industry.

Check out our latest analysis for Hangzhou Huasu TechnologyLtd

Hangzhou Huasu TechnologyLtd's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Hangzhou Huasu TechnologyLtd is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, EPS could fall by 17.2% 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 26%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Hangzhou Huasu TechnologyLtd Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings per share has been sinking by 17% over the last three years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Hangzhou Huasu TechnologyLtd's Dividend Doesn't Look Sustainable

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Hangzhou Huasu TechnologyLtd is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Hangzhou Huasu TechnologyLtd (1 is potentially serious!) that you should be aware of before investing. Is Hangzhou Huasu TechnologyLtd 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.