Stock Analysis

Best Pacific International Holdings' (HKG:2111) Dividend Will Be Reduced To HK$0.053

SEHK:2111
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Best Pacific International Holdings Limited (HKG:2111) has announced that on 30th of November, it will be paying a dividend ofHK$0.053, which a reduction from last year's comparable dividend. However, the dividend yield of 8.4% is still a decent boost to shareholder returns.

See our latest analysis for Best Pacific International Holdings

Best Pacific International Holdings' Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Best Pacific International Holdings' earnings easily cover the dividend. 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 86.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.

historic-dividend
SEHK:2111 Historic Dividend August 31st 2023

Best Pacific International Holdings' Dividend Has Lacked Consistency

Best Pacific International Holdings has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2014, the dividend has gone from HK$0.07 total annually to HK$0.0952. This means that it has been growing its distributions at 3.5% per annum over that time. 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.

Best Pacific International Holdings May Find It Hard To Grow The Dividend

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. Best Pacific International Holdings hasn't seen much change in its earnings per share over the last five years. If Best Pacific International Holdings is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Best Pacific International Holdings' Dividend

Even though the dividend was cut this year, we think Best Pacific International Holdings has the ability to make consistent payments in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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 1 warning sign for Best Pacific International Holdings that you should be aware of before investing. Is Best Pacific International Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.