BOC Hong Kong (Holdings) (HKG:2388) Has Affirmed Its Dividend Of HK$0.447

BOC Hong Kong (Holdings) Limited (HKG:2388) will pay a dividend of HK$0.447 on the 30th of September. This means the annual payment will be 4.2% of the current stock price, which is lower than the industry average.

See our latest analysis for BOC Hong Kong (Holdings)

BOC Hong Kong (Holdings)'s Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, BOC Hong Kong (Holdings) has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but BOC Hong Kong (Holdings)'s payout ratio of 50% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 64.9%. Analysts forecast the future payout ratio could be 53% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was HK$1.19 in 2012, and the most recent fiscal year payment was HK$1.13. Payments have been decreasing at a very slow pace in this time period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. BOC Hong Kong (Holdings) has seen earnings per share falling at 3.0% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for BOC Hong Kong (Holdings) that you should be aware of before investing. 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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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.