Shenzhen Bsc TechnologyLtd (SZSE:300951) Is Reducing Its Dividend To CN¥1.00

Shenzhen Bsc Technology Co.,Ltd. (SZSE:300951) has announced that on 23rd of May, it will be paying a dividend ofCN¥1.00, which a reduction from last year's comparable dividend. This means the annual payment is 2.4% of the current stock price, which is above the average for the industry.

View our latest analysis for Shenzhen Bsc TechnologyLtd

Shenzhen Bsc 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. Shenzhen Bsc 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.

EPS is set to fall by 1.9% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could be 57%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Shenzhen Bsc TechnologyLtd's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. Since 2021, the dividend has gone from CN¥0.833 total annually to CN¥1.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.3% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Shenzhen Bsc TechnologyLtd May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Shenzhen Bsc TechnologyLtd hasn't seen much change in its earnings per share over the last three years.

Our Thoughts On Shenzhen Bsc TechnologyLtd's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We don't think Shenzhen Bsc TechnologyLtd is a great stock to add to your portfolio if income is your focus.

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. Taking the debate a bit further, we've identified 2 warning signs for Shenzhen Bsc TechnologyLtd that investors need to be conscious of moving forward. Is Shenzhen Bsc TechnologyLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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