Bohai Water IndustryLtd (SZSE:000605) Has Affirmed Its Dividend Of CN¥0.02

Bohai Water Industry Co.,Ltd (SZSE:000605) has announced that it will pay a dividend of CN¥0.02 per share on the 9th of July. This payment means the dividend yield will be 0.4%, which is below the average for the industry.

See our latest analysis for Bohai Water IndustryLtd

Bohai Water IndustryLtd's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Bohai Water IndustryLtd was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, EPS could fall by 22.9% 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 41%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Bohai Water IndustryLtd's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of CN¥0.0357 in 2018 to the most recent total annual payment of CN¥0.02. The dividend has shrunk at around 9.2% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Bohai Water IndustryLtd's EPS has fallen by approximately 23% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Our Thoughts On Bohai Water IndustryLtd's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Bohai Water IndustryLtd's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 Bohai Water IndustryLtd that investors need to be conscious of moving forward. Is Bohai Water IndustryLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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