Riverine China Holdings (HKG:1417) Is Paying Out A Larger Dividend Than Last Year

Riverine China Holdings Limited (HKG:1417) has announced that it will be increasing its dividend on the 18th of July to HK$0.035. Even though the dividend went up, the yield is still quite low at only 2.3%.

View our latest analysis for Riverine China Holdings

Riverine China Holdings' Earnings Easily Cover the Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Riverine China Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 1.6% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 30%, which is definitely feasible to continue.

Riverine China Holdings' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from CN¥0.024 in 2018 to the most recent annual payment of CN¥0.029. This implies that the company grew its distributions at a yearly rate of about 4.4% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. Riverine China Holdings hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Riverine China Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think Riverine China Holdings' payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Riverine China Holdings has 3 warning signs (and 1 which doesn't sit too well with us) we think 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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