Yahoo Finance SIIC Environment Holdings (SGX:BHK) Will Pay A Dividend Of CN¥0.006
The board of SIIC Environment Holdings Ltd. (SGX:BHK) has announced that it will pay a dividend of CN¥0.006 per share on the 31st of May. However, the dividend yield of 6.6% is still a decent boost to shareholder returns.
View our latest analysis for SIIC Environment Holdings
SIIC Environment Holdings' Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, SIIC Environment Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
If the trend of the last few years continues, EPS will grow by 2.5% over the next 12 months. If the dividend continues on this path, the payout ratio could be 4.8% by next year, which we think can be pretty sustainable going forward.
SIIC Environment Holdings' Dividend Has Lacked Consistency
It's comforting to see that SIIC Environment Holdings has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 7 years was CN¥0.0473 in 2017, and the most recent fiscal year payment was CN¥0.0588. This works out to be a compound annual growth rate (CAGR) of approximately 3.2% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
Dividend Growth May Be Hard To Achieve
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, SIIC Environment Holdings has only grown its earnings per share at 2.5% per annum over the past five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
In Summary
Even though the dividend was cut this year, we think SIIC Environment Holdings has the ability to make consistent payments in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for SIIC Environment Holdings (of which 1 is concerning!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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