Zhejiang Entive Smart Kitchen Appliance (SZSE:300911) Will Pay A Larger Dividend Than Last Year At CN¥1.00

The board of Zhejiang Entive Smart Kitchen Appliance Co., Ltd. (SZSE:300911) has announced that it will be paying its dividend of CN¥1.00 on the 23rd of May, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 3.1%, which is in line with the average for the industry.

See our latest analysis for Zhejiang Entive Smart Kitchen Appliance

Zhejiang Entive Smart Kitchen Appliance's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. At the time of the last dividend payment, Zhejiang Entive Smart Kitchen Appliance was paying out a very large proportion of what it was earning and 2,871% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Looking forward, earnings per share is forecast to rise by 66.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 53%, which is in the range that makes us comfortable with the sustainability of the dividend.

Zhejiang Entive Smart Kitchen Appliance Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from CN¥0.50 total annually to CN¥1.00. This means that it has been growing its distributions at 26% per annum over that time. Zhejiang Entive Smart Kitchen Appliance has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

We Could See Zhejiang Entive Smart Kitchen Appliance's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Zhejiang Entive Smart Kitchen Appliance has seen EPS rising for the last five years, at 7.3% per annum. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Zhejiang Entive Smart Kitchen Appliance's payments are rock solid. While Zhejiang Entive Smart Kitchen Appliance is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Zhejiang Entive Smart Kitchen Appliance (1 can't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.