Foshan NationStar OptoelectronicsLtd (SZSE:002449) Has Announced A Dividend Of CN¥0.06

Foshan NationStar Optoelectronics Co.,Ltd (SZSE:002449) has announced that it will pay a dividend of CN¥0.06 per share on the 14th of June. This payment means the dividend yield will be 0.9%, which is below the average for the industry.

Check out our latest analysis for Foshan NationStar OptoelectronicsLtd

Foshan NationStar OptoelectronicsLtd's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. The last dividend was quite easily covered by Foshan NationStar OptoelectronicsLtd's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 27.9% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 55%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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. The dividend has gone from an annual total of CN¥0.0769 in 2014 to the most recent total annual payment of CN¥0.06. Doing the maths, this is a decline of about 2.5% per year. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

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. Foshan NationStar OptoelectronicsLtd's earnings per share has shrunk at 28% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Foshan NationStar OptoelectronicsLtd (of which 1 is a bit concerning!) you should know about. Is Foshan NationStar OptoelectronicsLtd not quite the opportunity you were looking for? Why not check out our selection of top 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.