Beijing Urban Construction Design & Development Group (HKG:1599) Is Increasing Its Dividend To CN¥0.2114

Beijing Urban Construction Design & Development Group Co., Limited (HKG:1599) will increase its dividend from last year's comparable payment on the 25th of August to CN¥0.2114. This will take the dividend yield to an attractive 8.9%, providing a nice boost to shareholder returns.

Check out our latest analysis for Beijing Urban Construction Design & Development Group

Beijing Urban Construction Design & Development Group's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Beijing Urban Construction Design & Development Group's 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.

Looking forward, earnings per share is forecast to rise by 30.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

Beijing Urban Construction Design & Development Group Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of CN¥0.0737 in 2015 to the most recent total annual payment of CN¥0.19. This means that it has been growing its distributions at 13% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Beijing Urban Construction Design & Development Group has seen EPS rising for the last five years, at 13% per annum. Beijing Urban Construction Design & Development Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Beijing Urban Construction Design & Development Group's Dividend

Overall, a dividend increase is always good, and we think that Beijing Urban Construction Design & Development Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Beijing Urban Construction Design & Development Group that investors need to be conscious of moving forward. 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.