China Boqi Environmental (Holding)'s (HKG:2377) Dividend Will Be Increased To CN¥0.046

China Boqi Environmental (Holding) Co., Ltd.'s (HKG:2377) periodic dividend will be increasing on the 9th of July to CN¥0.046, with investors receiving 31% more than last year's CN¥0.035. This takes the annual payment to 6.0% of the current stock price, which is about average for the industry.

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China Boqi Environmental (Holding)'s Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. 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 8.8% if recent trends continue. If the dividend continues on this path, the payout ratio could be 13% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for China Boqi Environmental (Holding)

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

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 6 years was CN¥0.0789 in 2019, and the most recent fiscal year payment was CN¥0.0422. Doing the maths, this is a decline of about 9.9% per year. A company that decreases its dividend over time generally isn't what we are looking for.

China Boqi Environmental (Holding) Could Grow Its Dividend

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. We are encouraged to see that China Boqi Environmental (Holding) has grown earnings per share at 8.8% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

China Boqi Environmental (Holding) Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that China Boqi Environmental (Holding) is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for China Boqi Environmental (Holding) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.