Tianneng Power International (HKG:819) Will Pay A Larger Dividend Than Last Year At CN¥0.43

Tianneng Power International Limited (HKG:819) will increase its dividend from last year's comparable payment on the 8th of July to CN¥0.43. This will take the dividend yield to an attractive 5.8%, providing a nice boost to shareholder returns.

Check out our latest analysis for Tianneng Power International

Tianneng Power International's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Tianneng Power International's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 8.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was CN¥0.189 in 2014, and the most recent fiscal year payment was CN¥0.39. This implies that the company grew its distributions at a yearly rate of about 7.5% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Tianneng Power International has grown earnings per share at 8.9% per year over the past five years. Tianneng Power International definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Tianneng Power International Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Tianneng Power International that you should be aware of before investing. Is Tianneng Power International 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.