July 20, 2024


The value of truth

Chuzhou Duoli Automotive Technology’s (SZSE:001311) Shareholders Will Receive A Bigger Dividend Than Last Year

3 min read
Chuzhou Duoli Automotive Technology’s (SZSE:001311) Shareholders Will Receive A Bigger Dividend Than Last Year

Chuzhou Duoli Automotive Technology Co., Ltd. (SZSE:001311) has announced that it will be increasing its dividend from last year’s comparable payment on the 11th of June to CN¥0.82. This makes the dividend yield 2.2%, which is above the industry average.

View our latest analysis for Chuzhou Duoli Automotive Technology

Chuzhou Duoli Automotive Technology’s Earnings Easily Cover The Distributions

If the payments aren’t sustainable, a high yield for a few years won’t matter that much. Prior to this announcement, Chuzhou Duoli Automotive Technology’s earnings easily covered the dividend, but free cash flows were negative. 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 is forecast to expand by 66.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

SZSE:001311 Historic Dividend June 5th 2024

Chuzhou Duoli Automotive Technology Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn’t been paying one for very long. 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.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. It’s encouraging to see that Chuzhou Duoli Automotive Technology has been growing its earnings per share at 32% a year over the past three years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

In summary, while it’s always good to see the dividend being raised, we don’t think Chuzhou Duoli Automotive Technology’s payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

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. Case in point: We’ve spotted 2 warning signs for Chuzhou Duoli Automotive Technology (of which 1 is a bit concerning!) you should know about. Is Chuzhou Duoli Automotive Technology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Valuation is complex, but we’re helping make it simple.

Find out whether Chuzhou Duoli Automotive Technology is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

Copyright © All rights reserved. | Newsphere by AF themes.