Zhejiang Wandekai Fluid Equipment Technology's (SZSE:301309) Dividend Is Being Reduced To CN¥0.30

Zhejiang Wandekai Fluid Equipment Technology Co., Ltd. (SZSE:301309) is reducing its dividend from last year's comparable payment to CN¥0.30 on the 13th of June. Based on this payment, the dividend yield will be 1.2%, which is lower than the average for the industry.

View our latest analysis for Zhejiang Wandekai Fluid Equipment Technology

Zhejiang Wandekai Fluid Equipment Technology's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Zhejiang Wandekai Fluid Equipment Technology is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS could expand by 11.5% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

Zhejiang Wandekai Fluid Equipment Technology Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. 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.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. We are encouraged to see that Zhejiang Wandekai Fluid Equipment Technology has grown earnings per share at 12% per year over the past three years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Zhejiang Wandekai Fluid Equipment Technology is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Zhejiang Wandekai Fluid Equipment Technology you should be aware of, and 1 of them doesn't sit too well with us. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.