Xiamen Voke Mold & Plastic Engineering's (SZSE:301196) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Xiamen Voke Mold & Plastic Engineering Co., Ltd. (SZSE:301196) has announced that it will be paying its dividend of CN¥0.90 on the 27th of June, an increased payment from last year's comparable dividend. This takes the dividend yield to 3.2%, which shareholders will be pleased with.

See our latest analysis for Xiamen Voke Mold & Plastic Engineering

Xiamen Voke Mold & Plastic Engineering's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Xiamen Voke Mold & Plastic Engineering's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 26.5% over the next 12 months. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.

Xiamen Voke Mold & Plastic Engineering Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the dividend has gone from CN¥0.60 total annually to CN¥0.90. This means that it has been growing its distributions at 22% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Xiamen Voke Mold & Plastic Engineering has impressed us by growing EPS at 27% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

Our Thoughts On Xiamen Voke Mold & Plastic Engineering's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Xiamen Voke Mold & Plastic Engineering is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

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. As an example, we've identified 1 warning sign for Xiamen Voke Mold & Plastic Engineering that you should be aware of before investing. Is Xiamen Voke Mold & Plastic Engineering 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.

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