Yahoo Finance China Everbright Water (SGX:U9E) Is Due To Pay A Dividend Of HK$0.0099
The board of China Everbright Water Limited (SGX:U9E) has announced that it will pay a dividend of HK$0.0099 per share on the 24th of May. This makes the dividend yield 9.7%, which is above the industry average.
View our latest analysis for China Everbright Water
China Everbright Water's Dividend Is Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, China Everbright Water was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Looking forward, earnings per share could rise by 10.2% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 5.7% by next year, which is in a pretty sustainable range.
China Everbright Water's Dividend Has Lacked Consistency
It's comforting to see that China Everbright Water has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of HK$0.0187 in 2016 to the most recent total annual payment of HK$0.124. This means that it has been growing its distributions at 27% per annum over that time. China Everbright Water has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. China Everbright Water has impressed us by growing EPS at 10% per year over the past five years. China Everbright Water definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Our Thoughts On China Everbright Water's Dividend
In summary, while it's always good to see the dividend being raised, we don't think China Everbright Water's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think China Everbright Water is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, China Everbright Water has 2 warning signs (and 1 which is concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
