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Guangdong High Dream Intellectualized Machinery (SZSE:300720) dividend increases to CN¥0.18

Guangdong High Dream Intellectualized Machinery Co., Ltd. (SZSE:300720) has announced that it will increase its dividend from last year’s comparable payment on May 31 to CN¥0.18. Although the dividend has increased, the yield is still quite low: only 1.0%.

Check out our latest analysis for Guangdong High Dream Intellectualized Machinery

Guangdong High Dream’s intellectual machines deliver more than they yield

The dividend yield is a bit low, but sustainability of payments is also an important part of evaluating an income stock. At the time of its last dividend payment, Guangdong High Dream Intellectualized Machinery paid out a very large portion of what it earned and 172% of its cash flows. Paying out such a large portion of cash flows could expose the company to the need to cut the dividend if the company runs into problems.

Looking ahead, earnings per share could fall 4.7% if the company can’t turn around the things it’s seen in recent years. Assuming the dividend continues to follow recent trends, we think the payout ratio could reach 116%, which could put pressure on the dividend if earnings don’t start improving.

SZSE:300720 Historical dividend May 29, 2024

Guangdong High Dream Intellectualized Machinery’s dividend lacks consistency

Guangdong High Dream Intellectualized Machinery has been paying off for a while, but its track record is not great. This makes us cautious about the consistency of the dividend over a full economic cycle. As of 2018, the annual payment at the time was CN¥0.0741, compared to the most recent full annual payment of CN¥0.18. This means the company has grown its payouts at approximately 16% annually over that period. Despite rapid dividend growth in recent years, we have also seen payouts decline in recent years, so that makes us cautious.

Guangdong High Dream’s intellectual machines may find it difficult to grow the dividend

Growing earnings per share could be a mitigating factor if we consider past dividend fluctuations. It’s not great to see that Guangdong High Dream Intellectualized Machinery’s earnings per share have fallen to around 4.7% per year over the past five years. Falling profits will inevitably lead to the company paying a lower dividend in line with lower profits.

Guangdong High Dream Intellectualized Machinery’s dividend doesn’t look sustainable

Overall, this probably isn’t a great income stock, even if the dividend is currently being increased. The track record isn’t great and the payments are a bit high to be considered sustainable. We don’t think Guangdong High Dream Intellectualized Machinery is a great stock to add to your portfolio if income is your focus.

Companies with a stable dividend policy are likely to enjoy greater investor interest than companies that suffer from a more inconsistent approach. At the same time, there are other factors our readers should be aware of before putting capital into stocks. As an example, we came across this Three Warning Signs for Guangdong High Dream Intellectualized Machinery that you should take into account, and one of them makes us a little uncomfortable. Is Guangdong High Dream Intellectualized Machinery not quite the opportunity you were looking for? Take a look at our selection of top dividend stocks.

Valuation is complex, but we help make it simple.

Find out whether Guangdong High Dream Intellectualized Machinery is potentially over or undervalued by checking out our comprehensive analysis, including fair value estimates, risks and cautions, dividends, insider transactions and financial health.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.

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