Guangdong TianYiMa Information IndustryLtd (SZSE:301178) Will Pay A Larger Dividend Than Last Year At CN¥0.10

Guangdong TianYiMa Information Industry Co.,Ltd. (SZSE:301178) has announced that it will be increasing its dividend from last year's comparable payment on the 12th of July to CN¥0.10. This takes the annual payment to 0.5% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Guangdong TianYiMa Information IndustryLtd

Guangdong TianYiMa Information IndustryLtd Doesn't Earn Enough To Cover Its Payments

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before this announcement, Guangdong TianYiMa Information IndustryLtd was paying out 734% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating free cash flows is a major warning sign for the sustainability of the dividend as these levels are certainly a bit high.

Looking forward, EPS could fall by 53.6% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 1,120%, which could put the dividend under pressure if earnings don't start to improve.

Guangdong TianYiMa Information IndustryLtd's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 2 years was CN¥0.286 in 2022, and the most recent fiscal year payment was CN¥0.10. The dividend has fallen 65% over that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Guangdong TianYiMa Information IndustryLtd's EPS has fallen by approximately 54% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We're Not Big Fans Of Guangdong TianYiMa Information IndustryLtd's Dividend

In conclusion, we have some concerns about this dividend, even though it being raised is good. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 4 warning signs for Guangdong TianYiMa Information IndustryLtd (3 are potentially serious!) that you should be aware of before investing. 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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