Jiangsu Smartwin Electronics TechnologyLtd (SZSE:301106) Will Pay A Smaller Dividend Than Last Year

Jiangsu Smartwin Electronics Technology Co.,Ltd.'s (SZSE:301106) dividend is being reduced from last year's payment covering the same period to CN¥0.40 on the 24th of May. This means that the annual payment is 1.1% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for Jiangsu Smartwin Electronics TechnologyLtd

Jiangsu Smartwin Electronics TechnologyLtd's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Jiangsu Smartwin Electronics TechnologyLtd 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.

Over the next year, EPS could expand by 5.4% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.

Jiangsu Smartwin Electronics 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. The dividend has gone from an annual total of CN¥0.30 in 2022 to the most recent total annual payment of CN¥0.40. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Jiangsu Smartwin Electronics TechnologyLtd Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Jiangsu Smartwin Electronics TechnologyLtd has grown earnings per share at 5.4% per year over the past five years. Jiangsu Smartwin Electronics TechnologyLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Jiangsu Smartwin Electronics TechnologyLtd's Dividend

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

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. To that end, Jiangsu Smartwin Electronics TechnologyLtd has 2 warning signs (and 1 which is significant) we think you should know about. Is Jiangsu Smartwin Electronics 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.