China Boqi Environmental (Holding)'s (HKG:2377) Dividend Will Be HK$0.074

The board of China Boqi Environmental (Holding) Co., Ltd. (HKG:2377) has announced that it will pay a dividend on the 14th of July, with investors receiving HK$0.074 per share. This payment means that the dividend yield will be 5.3%, which is around the industry average.

See our latest analysis for China Boqi Environmental (Holding)

China Boqi Environmental (Holding)'s Earnings Easily Cover the Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, China Boqi Environmental (Holding)'s 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.

Over the next year, EPS could expand by 6.4% if recent trends continue. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

China Boqi Environmental (Holding)'s Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from CN¥0.079 in 2019 to the most recent annual payment of CN¥0.06. Doing the maths, this is a decline of about 8.8% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see China Boqi Environmental (Holding) has been growing its earnings per share at 6.4% a year over the past five years. China Boqi Environmental (Holding) definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On China Boqi Environmental (Holding)'s Dividend

Overall, a consistent dividend is a good thing, and we think that China Boqi Environmental (Holding) has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. For instance, we've picked out 2 warning signs for China Boqi Environmental (Holding) that investors should take into consideration. Is China Boqi Environmental (Holding) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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