Tongxing Environmental Protection TechnologyLtd (SZSE:003027) Is Reducing Its Dividend To CN¥0.06

Tongxing Environmental Protection Technology Co.,Ltd's (SZSE:003027) dividend is being reduced from last year's payment covering the same period to CN¥0.06 on the 6th of June. This means that the dividend yield is 0.4%, which is a bit low when comparing to other companies in the industry.

See our latest analysis for Tongxing Environmental Protection TechnologyLtd

Tongxing Environmental Protection TechnologyLtd Doesn't Earn Enough To Cover Its Payments

Even a low dividend yield can be attractive if it is sustained for years on end. Before this announcement, Tongxing Environmental Protection TechnologyLtd was paying out 118% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

EPS is set to fall by 47.3% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 154%, which could put the dividend under pressure if earnings don't start to improve.

Tongxing Environmental Protection TechnologyLtd's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2021, the annual payment back then was CN¥0.333, compared to the most recent full-year payment of CN¥0.06. This works out to a decline of approximately 82% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Limited Growth Potential

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 47% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Tongxing Environmental Protection TechnologyLtd's Dividend Doesn't Look Great

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. We don't think that this is a great candidate to be an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Tongxing Environmental Protection TechnologyLtd (of which 1 doesn't sit too well with us!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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