Jiangxi Everbright Measurement And Control TechnologyLtd (SZSE:300906) Is Increasing Its Dividend To CN¥0.50

Jiangxi Everbright Measurement And Control Technology Co.,Ltd. (SZSE:300906) has announced that it will be increasing its dividend from last year's comparable payment on the 7th of June to CN¥0.50. This takes the dividend yield to 2.2%, which shareholders will be pleased with.

View our latest analysis for Jiangxi Everbright Measurement And Control TechnologyLtd

Jiangxi Everbright Measurement And Control TechnologyLtd'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. Jiangxi Everbright Measurement And Control TechnologyLtd was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Over the next year, EPS could expand by 1.2% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 62%, which is in the range that makes us comfortable with the sustainability of the dividend.

Jiangxi Everbright Measurement And Control TechnologyLtd's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The payments haven't really changed that much since 3 years ago. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Jiangxi Everbright Measurement And Control TechnologyLtd's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. Growth of 1.2% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Our Thoughts On Jiangxi Everbright Measurement And Control TechnologyLtd's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Jiangxi Everbright Measurement And Control TechnologyLtd's payments are rock solid. While Jiangxi Everbright Measurement And Control TechnologyLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Jiangxi Everbright Measurement And Control TechnologyLtd (1 is a bit concerning!) that you should be aware of before investing. Is Jiangxi Everbright Measurement And Control TechnologyLtd 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.