Beijing Bashi Media's (SHSE:600386) Dividend Is Being Reduced To CN¥0.02

Beijing Bashi Media Co., Ltd.'s (SHSE:600386) dividend is being reduced from last year's payment covering the same period to CN¥0.02 on the 21st of August. This payment takes the dividend yield to 0.6%, which only provides a modest boost to overall returns.

Check out our latest analysis for Beijing Bashi Media

Beijing Bashi Media Is Paying Out More Than It Is Earning

Even a low dividend yield can be attractive if it is sustained for years on end. Before this announcement, Beijing Bashi Media was paying out 95% of earnings, but a comparatively small 11% of free cash flows. This leaves plenty of cash for reinvestment into the business.

EPS is set to fall by 29.9% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 120%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the dividend has gone from CN¥0.135 total annually to CN¥0.02. The dividend has fallen 85% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings per share has been sinking by 30% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Beijing Bashi Media's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Beijing Bashi Media (of which 2 are significant!) you should know about. 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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