Beijing Asiacom Information Technology Co.Ltd (SZSE:301085) Is Increasing Its Dividend To CN¥0.2807

The board of Beijing Asiacom Information Technology Co,.Ltd (SZSE:301085) has announced that it will be paying its dividend of CN¥0.2807 on the 21st of May, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 0.6%.

See our latest analysis for Beijing Asiacom Information Technology Co.Ltd

Beijing Asiacom Information Technology Co.Ltd's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Beijing Asiacom Information Technology Co.Ltd is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, EPS could fall by 0.8% 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 31%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Beijing Asiacom Information Technology Co.Ltd'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 2022, the dividend has gone from CN¥1.25 total annually to CN¥0.28. The dividend has fallen 78% over that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Unfortunately, Beijing Asiacom Information Technology Co.Ltd's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Beijing Asiacom Information Technology Co.Ltd's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Beijing Asiacom Information Technology Co.Ltd will make a great income stock. While Beijing Asiacom Information Technology Co.Ltd is earning enough to cover the payments, the cash flows are lacking. 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. Case in point: We've spotted 4 warning signs for Beijing Asiacom Information Technology Co.Ltd (of which 3 can't be ignored!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.