Allwinnertech TechnologyLtd (SZSE:300458) Is Due To Pay A Dividend Of CN¥0.15

Allwinnertech Technology Co.,Ltd.'s (SZSE:300458) investors are due to receive a payment of CN¥0.15 per share on 6th of May. Including this payment, the dividend yield on the stock will be 0.7%, which is a modest boost for shareholders' returns.

View our latest analysis for Allwinnertech TechnologyLtd

Allwinnertech TechnologyLtd's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. The last payment made up 77% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to rise by 194.6% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 26% which would be quite comfortable going to take the dividend forward.

Allwinnertech TechnologyLtd's Dividend Has Lacked Consistency

Allwinnertech TechnologyLtd has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2016, the dividend has gone from CN¥0.0525 total annually to CN¥0.15. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Allwinnertech TechnologyLtd hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Allwinnertech TechnologyLtd's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Allwinnertech TechnologyLtd that investors need to be conscious of moving forward. 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.