Yahoo Finance SIIC Environment Holdings (SGX:BHK) Will Pay A Dividend Of CN¥0.006
SIIC Environment Holdings Ltd.'s (SGX:BHK) investors are due to receive a payment of CN¥0.006 per share on 31st of May. The dividend yield of 6.6% is still a nice boost to shareholder returns, despite the cut.
See our latest analysis for SIIC Environment Holdings
SIIC Environment Holdings' Earnings Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, SIIC Environment Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS could expand by 2.5% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.8% by next year, which is in a pretty sustainable range.
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 dividend has gone from an annual total of CN¥0.0473 in 2017 to the most recent total annual payment of CN¥0.0588. This means that it has been growing its distributions at 3.2% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
SIIC Environment Holdings May Find It Hard To Grow The Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 2.5% per year. If SIIC Environment Holdings is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On SIIC Environment Holdings' Dividend
Even though the dividend was cut this year, we think SIIC Environment Holdings has the ability to make consistent payments in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for SIIC Environment Holdings (1 is a bit unpleasant!) that you should be aware of before investing. Is SIIC Environment Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
