Cosonic Intelligent Technologies (SZSE:300793) Has Affirmed Its Dividend Of CN¥0.15

The board of Cosonic Intelligent Technologies Co., Ltd. (SZSE:300793) has announced that it will pay a dividend of CN¥0.15 per share on the 29th of May. The dividend yield is 1.2% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Cosonic Intelligent Technologies

Cosonic Intelligent Technologies' Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Cosonic Intelligent Technologies was earning enough to cover the dividend, but it wasn't generating any free cash flows. 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.

EPS is set to fall by 8.9% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 47%, which is definitely feasible to continue.

Cosonic Intelligent Technologies' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from an annual total of CN¥0.188 in 2020 to the most recent total annual payment of CN¥0.15. This works out to be a decline of approximately 5.4% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Is Doubtful

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Cosonic Intelligent Technologies has seen earnings per share falling at 8.9% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Cosonic Intelligent Technologies' Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 3 warning signs for Cosonic Intelligent Technologies that investors should take into consideration. Is Cosonic Intelligent Technologies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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