SMARTGEN (Zhengzhou) Technology (SZSE:301361) Is Paying Out A Larger Dividend Than Last Year

SMARTGEN (Zhengzhou) Technology Co., Ltd.'s (SZSE:301361) dividend will be increasing from last year's payment of the same period to CN¥0.07 on 7th of May. Although the dividend is now higher, the yield is only 0.4%, which is below the industry average.

See our latest analysis for SMARTGEN (Zhengzhou) Technology

SMARTGEN (Zhengzhou) Technology's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, SMARTGEN (Zhengzhou) Technology was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 6.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be by next year, which we think can be pretty sustainable going forward.

SMARTGEN (Zhengzhou) Technology Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

SMARTGEN (Zhengzhou) Technology Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. SMARTGEN (Zhengzhou) Technology has impressed us by growing EPS at 6.7% per year over the past five years. SMARTGEN (Zhengzhou) Technology definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On SMARTGEN (Zhengzhou) Technology's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. For example, we've picked out 1 warning sign for SMARTGEN (Zhengzhou) Technology that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.