WINBO-Dongjian Automotive Technology’s (SZSE:300978) Shareholders Will Receive A Bigger Dividend Than Last Year
The board of WINBO-Dongjian Automotive Technology Co., Ltd. (SZSE:300978) has announced that it will be paying its dividend of CN¥0.20 on the 3rd of June, an increased payment from last year’s comparable dividend. This takes the annual payment to 1.9% of the current stock price, which is about average for the industry.
Check out our latest analysis for WINBO-Dongjian Automotive Technology
WINBO-Dongjian Automotive Technology’s Earnings Easily Cover The Distributions
We aren’t too impressed by dividend yields unless they can be sustained over time. WINBO-Dongjian Automotive Technology was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
EPS is set to fall by 1.3% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could be 32%, which we consider to be quite comfortable, with most of the company’s earnings left over to grow the business in the future.
WINBO-Dongjian Automotive Technology’s Dividend Has Lacked Consistency
Even in its short history, we have seen the dividend cut. Since 2021, the dividend has gone from CN¥0.50 total annually to CN¥0.20. The dividend has fallen 60% over that period. A company that decreases its dividend over time generally isn’t what we are looking for.
Dividend Growth May Be Hard To Achieve
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Although it’s important to note that WINBO-Dongjian Automotive Technology’s earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
Our Thoughts On WINBO-Dongjian Automotive Technology’s Dividend
In summary, while it’s always good to see the dividend being raised, we don’t think WINBO-Dongjian Automotive Technology’s payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments WINBO-Dongjian Automotive Technology has been making. Overall, we don’t think this company has the makings of a good income stock.
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. For example, we’ve identified 2 warning signs for WINBO-Dongjian Automotive Technology (1 can’t be ignored!) that you should be aware of before investing. Is WINBO-Dongjian Automotive Technology not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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