Yunnan Botanee Bio-Technology GroupLTD (SZSE:300957) Will Pay A Smaller Dividend Than Last Year

Yunnan Botanee Bio-Technology Group Co.LTD's (SZSE:300957) dividend is being reduced from last year's payment covering the same period to CN¥0.6005 on the 11th of June. This payment takes the dividend yield to 1.1%, which only provides a modest boost to overall returns.

Check out our latest analysis for Yunnan Botanee Bio-Technology GroupLTD

Yunnan Botanee Bio-Technology GroupLTD's Earnings Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Yunnan Botanee Bio-Technology GroupLTD's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 91.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Yunnan Botanee Bio-Technology GroupLTD's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 3 years was CN¥0.45 in 2021, and the most recent fiscal year payment was CN¥0.60. This means that it has been growing its distributions at 10% 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Yunnan Botanee Bio-Technology GroupLTD has been growing its earnings per share at 5.3% a year over the past three years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Yunnan Botanee Bio-Technology GroupLTD's Dividend

Overall, we think that Yunnan Botanee Bio-Technology GroupLTD could make a reasonable income stock, even though it did cut the dividend this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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 instance, we've picked out 2 warning signs for Yunnan Botanee Bio-Technology GroupLTD that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.