BCEG Environmental Remediation (SZSE:300958) Will Pay A Smaller Dividend Than Last Year

BCEG Environmental Remediation Co., Ltd.'s (SZSE:300958) dividend is being reduced from last year's payment covering the same period to CN¥0.118 on the 5th of July. This means that the dividend yield is 1.1%, which is a bit low when comparing to other companies in the industry.

Check out our latest analysis for BCEG Environmental Remediation

BCEG Environmental Remediation's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, BCEG Environmental Remediation's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Unless the company can turn things around, EPS could fall by 8.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 41%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

BCEG Environmental Remediation's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The annual payment during the last 3 years was CN¥0.158 in 2021, and the most recent fiscal year payment was CN¥0.118. The dividend has shrunk at around 9.3% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Come By

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. It's not great to see that BCEG Environmental Remediation's earnings per share has fallen at approximately 8.8% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

BCEG Environmental Remediation's Dividend Doesn't Look Sustainable

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 BCEG Environmental Remediation 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 5 warning signs for BCEG Environmental Remediation (of which 2 are a bit unpleasant!) you should know about. 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.

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