Zhongjin Irradiation (SZSE:300962) Is Paying Out Less In Dividends Than Last Year

Zhongjin Irradiation Incorporated Company (SZSE:300962) has announced that on 19th of June, it will be paying a dividend ofCN¥0.29, which a reduction from last year's comparable dividend. However, the dividend yield of 2.2% still remains in a typical range for the industry.

Check out our latest analysis for Zhongjin Irradiation

Zhongjin Irradiation's Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Zhongjin Irradiation was paying out 70% of earnings and more than 75% of free cash flows. This is usually an indication that the focus of the company is returning cash to shareholders rather than reinvesting it for growth.

If the trend of the last few years continues, EPS will grow by 8.2% over the next 12 months. If the dividend continues on this path, the payout ratio could be 73% by next year, which we think can be pretty sustainable going forward.

Zhongjin Irradiation's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. The annual payment during the last 3 years was CN¥0.16 in 2021, and the most recent fiscal year payment was CN¥0.29. This means that it has been growing its distributions at 22% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Zhongjin Irradiation has seen EPS rising for the last five years, at 8.2% per annum. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

Our Thoughts On Zhongjin Irradiation's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. While Zhongjin Irradiation is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Zhongjin Irradiation that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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