The board of CRCC High-Tech Equipment Corporation Limited (HKG:1786) has announced that the dividend on 22nd of August will be increased to CN¥0.033, which will be 22% higher than last year's payment of CN¥0.027 which covered the same period. This takes the dividend yield to 4.7%, which shareholders will be pleased with.
See our latest analysis for CRCC High-Tech Equipment
CRCC High-Tech Equipment's Payment Has Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, based ont he last payment, CRCC High-Tech Equipment was earning enough to cover the dividend pretty comfortably. The business is returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.
Looking forward, EPS could fall by 1.5% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 29%, which is definitely feasible to continue.
CRCC High-Tech Equipment's Dividend Has Lacked Consistency
Looking back, CRCC High-Tech Equipment's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2016, the dividend has gone from CN¥0.04 total annually to CN¥0.03. This works out to be a decline of approximately 3.5% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend's Growth Prospects Are Limited
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. CRCC High-Tech Equipment hasn't seen much change in its earnings per share over the last five years.
Our Thoughts On CRCC High-Tech Equipment's Dividend
Overall, we always like to see the dividend being raised, but we don't think CRCC High-Tech Equipment will make a great income stock. While CRCC High-Tech Equipment is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, CRCC High-Tech Equipment has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is CRCC High-Tech Equipment 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.
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