HangZhou Everfine Photo-e-info (SZSE:300306) Will Pay A Larger Dividend Than Last Year At CN¥0.30

HangZhou Everfine Photo-e-info Co., Ltd. (SZSE:300306) will increase its dividend from last year's comparable payment on the 21st of May to CN¥0.30. This takes the dividend yield to 3.0%, which shareholders will be pleased with.

View our latest analysis for HangZhou Everfine Photo-e-info

HangZhou Everfine Photo-e-info's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last payment made up 88% 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.

If the trend of the last few years continues, EPS will grow by 50.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 66%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from CN¥0.11 total annually to CN¥0.30. This means that it has been growing its distributions at 11% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

HangZhou Everfine Photo-e-info's Dividend Might Lack Growth

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that HangZhou Everfine Photo-e-info has been growing its earnings per share at 51% a year over the past five years. However, HangZhou Everfine Photo-e-info isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

Our Thoughts On HangZhou Everfine Photo-e-info's Dividend

Overall, we always like to see the dividend being raised, but we don't think HangZhou Everfine Photo-e-info will make a great income stock. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think HangZhou Everfine Photo-e-info is a great stock to add to your portfolio if income is your focus.

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. For instance, we've picked out 2 warning signs for HangZhou Everfine Photo-e-info that investors should take into consideration. Is HangZhou Everfine Photo-e-info 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.