The board of Northking Information Technology Co., Ltd. (SZSE:002987) has announced that it will be paying a dividend of CN¥0.17 on the 16th of May, which is an increase from last year’s dividend. This brings the dividend yield to about 1.0%, in line with the industry average.
Northking Information Technology’s earnings easily cover the dividend, but weak cash flows are a concern for future payouts. However, with forecasted earnings per share expected to rise by 62.0% over the next year, the payout ratio could be sustainable at 16% by next year.
While the company has shown strong growth in dividend payments, the lack of consistency raises some concerns about the sustainability of the dividend. Despite this, with earnings per share growing at a rate of 27% per year over the past five years and a low payout ratio, Northking Information Technology could still be a good dividend stock.
In summary, while it’s positive to see the dividend increasing, the company’s cash flow situation raises doubts about the sustainability of the dividend. Investors should be cautious about relying solely on this stock for dividend income.
It’s important to consider all factors, not just dividends, when evaluating a company. If Northking Information Technology doesn’t meet your investment criteria, consider exploring other top dividend stocks.