Shandong Taihe Technologies (SZSE:300801) Has Announced That Its Dividend Will Be Reduced To CN¥0.167

Shandong Taihe Technologies Co., Ltd.'s (SZSE:300801) dividend is being reduced from last year's payment covering the same period to CN¥0.167 on the 30th of April. Based on this payment, the dividend yield will be 1.1%, which is lower than the average for the industry.

Check out our latest analysis for Shandong Taihe Technologies

Shandong Taihe Technologies' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, Shandong Taihe Technologies' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 8.8% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 27%, which is definitely feasible to continue.

Shandong Taihe Technologies' Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2020, the annual payment back then was CN¥0.278, compared to the most recent full-year payment of CN¥0.167. This works out to a decline of approximately 40% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Come By

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. It's not great to see that Shandong Taihe Technologies' earnings per share has fallen at approximately 8.8% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On Shandong Taihe Technologies' Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Shandong Taihe Technologies 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.

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