Yealink Network Technology (SZSE:300628) Has Announced A Dividend Of CN¥0.60

Yealink Network Technology Co., Ltd. (SZSE:300628) will pay a dividend of CN¥0.60 on the 26th of September. This takes the dividend yield to 5.1%, which shareholders will be pleased with.

See our latest analysis for Yealink Network Technology

Yealink Network Technology's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Yealink Network Technology was paying out quite a large proportion of both earnings and cash flow, with the dividend being 108% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.

Over the next year, EPS is forecast to expand by 52.9%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 67% which would be quite comfortable going to take the dividend forward.

Yealink Network Technology Is Still Building Its Track Record

Yealink Network Technology's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of CN¥0.107 in 2017 to the most recent total annual payment of CN¥1.80. This implies that the company grew its distributions at a yearly rate of about 50% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Yealink Network Technology's Dividend Might Lack Growth

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Yealink Network Technology has grown earnings per share at 17% per year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

Yealink Network Technology's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Yealink Network Technology's payments are rock solid. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Yealink Network Technology that you should be aware of before investing. Is Yealink Network Technology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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