Shanghai Hi-Tech Control System (SZSE:002184) Has Announced A Dividend Of CN¥0.10

Shanghai Hi-Tech Control System Co., Ltd's (SZSE:002184) investors are due to receive a payment of CN¥0.10 per share on 2nd of August. The dividend yield will be 1.2% based on this payment which is still above the industry average.

See our latest analysis for Shanghai Hi-Tech Control System

Shanghai Hi-Tech Control System's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Shanghai Hi-Tech Control System's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 62.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was CN¥0.068, compared to the most recent full-year payment of CN¥0.10. This implies that the company grew its distributions at a yearly rate of about 3.9% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

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. Shanghai Hi-Tech Control System has impressed us by growing EPS at 34% per year over the past five years. Shanghai Hi-Tech Control System is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Shanghai Hi-Tech Control System Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend 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 Shanghai Hi-Tech Control System 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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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.

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