Beijing Hanyi Innovation Technology's (SZSE:301270) Dividend Is Being Reduced To CN¥0.35

Beijing Hanyi Innovation Technology Co., Ltd.'s (SZSE:301270) dividend is being reduced from last year's payment covering the same period to CN¥0.35 on the 29th of May. Despite the cut, the dividend yield of 1.4% will still be comparable to other companies in the industry.

See our latest analysis for Beijing Hanyi Innovation Technology

Beijing Hanyi Innovation Technology Is Paying Out More Than It Is Earning

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, the dividend made up 108% of earnings, and the company was generating negative free cash flows. 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 22.0% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 139%, which could put the dividend in jeopardy if the company's earnings don't improve.

Beijing Hanyi Innovation Technology Doesn't Have A Long Payment History

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.

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 22% over the last three years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

We're Not Big Fans Of Beijing Hanyi Innovation Technology's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Beijing Hanyi Innovation Technology has 4 warning signs (and 3 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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